Fitch Ratings raises India`s GDP growth forecast to 6.9% for FY26
Fitch Ratings in its Global Economic Outlook (GEO)-September has raised India’s gross domestic product (GDP) growth forecast to 6.9 per cent for current fiscal year (FY26), from 6.5 per cent earlier, citing strong June quarter growth and domestic consumption-led demand. Fitch is the first global rating agency to have upped India’s GDP growth estimates for current fiscal year after the string of downward revisions by various agencies earlier this year due to trade and tariff uncertainties.
It said the pace of economic activity accelerated sharply between the March and June quarters of current fiscal year. The real GDP growth in April-June rose to 7.8 per cent year-on-year, from 7.4 per cent in January-March. In its June GEO report, Fitch had forecast a 6.7 per cent growth for the April-June quarter. Further, it said the trade tensions with the US have increased in recent months, with the US imposing an additional 25 per cent tariff on imports from India. Effective August 27, Indian goods in US attract a 50 per cent duty.
Moreover, it said ‘We expect this will eventually be negotiated lower, but the uncertainty around trade relations will dampen business sentiment and potentially investment. The government has adopted reforms to the Goods and Services Tax to be effective from September 22, which should modestly boost consumer spending over the remainder of this and the next fiscal years.’ It added domestic demand will be the key driver of growth, as strong real income dynamics support consumer spending and looser financial conditions should feed through to investment. However, it expects growth to slow in the second half (October-March) of the financial year. For the next fiscal year (2026-27), it projected growth at 6.3 per cent, which would edge down to 6.2 per cent in FY28.
