Fitch Raises India's FY26 Growth Forecast to 6.9%

FITCH RATINGS has raised its economic growth projection for India to 6.9% for FY26 from 6.5% previously, citing stronger first-quarter GDP growth and a likely boost to consumption from the Goods and Services Tax (GST) rate cuts.

- FE BUREAU

India's Q1FY26 GDP growth came in at 7.8%, almost 100 basis points more than consensus. Manufacturing and services sectors are the star performers of Q1 and grew by 7.7% and 9.3%, respectively.

Last week, India lowered the GST on as many as 375 items of everyday use in an attempt to spur demand.

"We estimate the fiscal cost of the reforms to be around 0.2% of GDP annually, but the potential boost to consumption and growth will depend on the extent to which companies pass on lower taxes to consumers," Fitch said.