Economy: Fitch raises India’s GDP growth in FY25 to 7.2 %

Virendra Pandit

New Delhi: Fitch Ratings on Tuesday raised India’s GDP growth forecast for the current fiscal (2024-25) from 7 percent estimated in March 2024 to 7.2 per cent now in view of a recovery in consumer spending and increased investment.

For the next two fiscal years, it projected growth rates of 6.5 percent (FY26) and 6.2 percent (FY27), respectively, the media reported.
“We expect the Indian economy to expand by a strong 7.2 percent in FY24/25 (an upward revision of 0.2 pp from the March GEO),” Fitch said in its “Global Economic Outlook” report.

Fitch’s fresh estimates follow that of the Reserve Bank of India (RBI) which, earlier this month, projected Indian economy to expand 7.2 percent in FY25 on the back of improving rural demand and moderating inflation.

Investment will continue to rise but more slowly than in recent quarters, while consumer spending will recover with elevated consumer confidence, it said.

Fitch said purchasing managers survey data point to continued growth at the start of the current financial year. Signs of the coming monsoon season being more normal should support growth and make inflation less volatile, though a recent heatwave poses a risk.

“We expect growth in later years to slow and approach our medium-term trend estimate,” it said, adding growth will be driven by consumer spending and investment.

The Indian economy grew 8.2 percent in the last fiscal (2023-24), with a 7.8 percent expansion in the fourth (January-March) quarter.
Inflation, Fitch expects, will decline to 4.5 percent by the end of 2024 and average 4.3 percent in 2025 and 2026.

Fitch said it expects the RBI to cut policy interest rates by 25 basis points this year to 6.25 percent.