Fitch raises India’s growth forecast for FY25 to 7.2% from 7%

India's Growth Forecast: Fitch Ratings on June 18 increased India's growth forecast for the current fiscal year to 7.2 per cent, up from 7 per cent projected in March. This revision is due to a recovery in consumer spending and increased investment, according to PTI.

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

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Current Fiscal Year

“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 GEO),” Fitch stated in its global economic outlook report.

Fitch's estimates aligns 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.

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Fitch noted that investment will continue to rise, albeit more slowly than in recent quarters. Consumer spending is expected to recover, supported by high consumer confidence.

Growth Indicators

Purchasing managers survey data indicated continued growth at the start of the current financial year. The anticipated normal monsoon season is expected to support growth and stabilize inflation, though a recent heatwave poses a risk.

“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.

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The Indian economy grew 8.2 per cent in the last fiscal year (2023-24), with a 7.8 per cent expansion in the March quarter.

Fitch expects inflation to decline to 4.5 per cent by the end of 2024, averaging 4.3 per cent in 2025 and 2026. The RBI is anticipated to cut policy interest rates by 25 basis points this year to 6.25 per cent.

(With inputs from PTI)