BTN News: Fitch Ratings upped India’s economic growth forecast to 7. This revision also highlights a rise in consumer spending leading to better consumer sentiment and a substantial improvement in investment activities. These projections are broadly in line with recent forecasts by the Reserve Bank of India (RBI) and are a sign of India’s resilience, despite changing domestic and global equation.
Brief Economic Outlook and Projections: Fitch Ratings — India’s GDP is expected to expand robustly at 6.5% in FY25/26 and further to 6.2% in FY26/27. MCO expects a pick-up in consumer spending and a gentle recovery in investment, although it slowed down compared with previous quarters, to contribute to the positive trajectory. High-Frequency Purchase Managers surveys suggest a promising start to the financial year, highlighting continued momentum in the economy.
Factors Boosting Growth: The report points out that rural demand was improving and the inflation scene was settling down -all of this brightened the economic prospects. Even though challenges such as the immediate risk from the recent heatwaves remain, normal monsoon expectations overshadow these, thus supporting growth and offering to dampen inflationary pressures. Fitch expects growth to slow gradually after FY24/25, bordering medium-term trend estimates, underpinned mainly by resilient consumer and investment activity.
Inflation, Monetary Policy Presumptions: The agency predicts that inflation will fall to 4.5% at end-2024 with averages of 4.3% expected for 2025 and 2026. In view of these conditions, the agency expected RBI to cut its policy interest rates by as much as 25 basis points to 6.25% this year to further bolster the growth momentum and anchor inflationary expectations.
Conclusion: Fitch Ratings raising its growth estimate for India is another signal that the country may be turning a corner on the economy. As consumer spending and investment are expected to play a prominent role in the growth trajectory, along with a benign, inflation outlook and the impact of the policy recalibrations made through the year; the evolving situation on the economic landscape could potentially be negotiated well by India.
