Fitch bullish on India, upgrades GDP forecasts, cautious on rate cuts

Fitch Ratings raised its economic growth forecast for India for the current fiscal year and the next, citing robust domestic demand and sustained growth in business and consumer confidence levels.

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The rating agency anticipates India’s real gross domestic product (GDP) to expand by 7.0 per cent in fiscal 2025, starting in April, marking a 50 basis points (bps) increase from its previous December projection, as per a report released on Thursday.

India’s economy surged by 8.4 per cent in the final quarter of 2023, marking its fastest pace of growth in 18 months, propelled by strong performance in manufacturing and construction sectors.

Fitch predicts a slight moderation in growth momentum in the final quarter of the current fiscal year, estimating a growth rate of 7.8 per cent for fiscal 2023/24. This forecast exceeds the Indian government’s revised estimate of 7.6 per cent and stands as one of the most optimistic projections on record. However, Reserve Bank of India Governor Shaktikanta Das recently hinted that growth could approach the 8 per cent mark.