Fitch Ratings increased India’s growth forecast for the current fiscal to 7.2 per cent, up from 7 per cent projected in March due to a recovery in consumer spending and increased investment.

For the fiscal years 2025-26 and 2026-27, Fitch projected growth rates of 6.5 per cent and 6.2 per cent, respectively.

In its global economic outlook report, Fitch said, “We expect the Indian economy to expand by a strong 7.2 per cent in FY24/25, an upward revision of 0.2 pp from the March Global Economic Outlook (GEO).”

Fitch’s estimates align with those of the Reserve Bank of India (RBI), which earlier this month projected a 7.2 per cent growth for the current fiscal year, supported by improving rural demand and moderating inflation.

The rating agency said that the investment will continue to rise, albeit more slowly than in recent quarters. Consumer spending is expected to recover, supported by high consumer confidence.

“We expect growth in later years to slow and approach our medium-term trend estimate,” Fitch added, indicating that growth will be driven by consumer spending and investment.

Fitch anticipates that investment will continue to rise during Prime Minister Narendra Modi’s third term, albeit slower than in recent quarters.

Additionally, consumer spending is expected to recover due to high consumer confidence.

An ‘above normal’ monsoon forecast for June-September is expected to mitigate risks of food price spikes. Fitch projects that headline inflation in India will decrease to 4.5 per cent by the end of 2024, averaging 4.3 per cent in 2025 and 2026.

In contrast, Fitch forecasts a slowdown in global growth in 2025 despite monetary easing expected in 2024.

The Fitch Ratings revised its growth forecast for the global economy to 2.6 per cent from the earlier projected 2.4 per cent.

Last week, the World Bank retained its growth forecast for India at 6.6 per cent for FY25.

In its latest biannual Global Economic Prospects it said India will remain the fastest-growing of the world’s largest economies, although its pace of expansion is expected to moderate. After a high growth rate in FY 2023/24, steady growth of 6.7 per cent per year, on average, is projected for the three fiscal years beginning in FY 2024/25.