Coming as a positive development for the Indian economy, the Fitch rating agency has raised its estimate for India’s economic growth for this fiscal year and next.
Representation image (File Photo)
Coming as a positive development for the Indian economy, the Fitch rating agency has raised its estimate for India’s economic growth for this fiscal year and next.
The projection is based on the strong domestic demand and persistent growth in business and consumer confidence levels, but tempered its view on rate cuts.
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Fitch expects the Indian economy to continue its strong expansion, with real gross domestic product forecast to increase by 7 per cent in fiscal 2025, which starts in April, a 50 basis points (bps) increase from its December forecast.
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“With GDP growth having exceeded 8 per cent for three consecutive quarters, we expect an easing in growth momentum in the final quarter of the current fiscal year, implying an estimate of 7.8 per cent for growth in FY23/24,” Fitch said on Thurday.
Its forecast for fiscal 2024 is above the Indian government’s revised estimate of 7.6 per cent and one of the most bullish on record.
Fitch further said in its report that “Domestic demand, especially investment, will be the main driver of growth, amid sustained levels of business and consumer confidence.”
For this quarter, India’s economy grew 8.4 per cent in the final three months of 2023, its fastest pace in 18 months, led by strong manufacturing and construction activity.
Further, Reserve Bank of India Governor Shaktikanta Das also said that the growth could be very close to 8 per cent.
On retail inflation, Fitch expects the headline number to steadily decrease to 4 per cent by the end of this calendar year on the assumption that recent food price volatility will subside.
The government data released on Tuesday has said the consumer price index (CPI)-based inflation for the month of February eased to four-month low of 5.9 per cent staying within the RBI’s tolerance level of 2-6 per cent for six consecutive months.
Fitch has also expected the RBI to cut interest rates only in the second half of the calendar year, lowering its estimate to 50 bps of rate cuts, from 75 bps in December, due to the stronger growth outlook.
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