Daijiworld Media Network – New Delhi
New Delhi, Sep 11: Global rating agency Fitch has revised India’s GDP growth forecast for FY26 to 6.9%, up from its earlier estimate of 6.5%, citing robust domestic demand and stronger-than-expected growth in the June quarter.
Fitch becomes the first international ratings agency to upgrade India’s growth outlook this fiscal, even as trade tensions with the United States and tariff hikes have created uncertainties.
In its September edition of the Global Economic Outlook (GEO), Fitch noted that India’s real GDP expanded by 7.8% in April–June 2025, compared to 7.4% in January–March, reflecting accelerated economic momentum. Earlier, the agency had projected 6.7% growth for the June quarter in its June GEO report.
“On the back of the Q2 outturn, Fitch has revised its FY26 forecast to 6.9% from 6.5%,” the report said.
The rating agency observed that while U.S. tariffs on Indian imports—now at 50% following the August 27 hike—pose risks to trade and investment sentiment, domestic consumption remains the main growth engine. Reforms to the Goods and Services Tax, effective from September 22, are expected to boost consumer spending in the coming quarters.
Strong real income growth, resilient consumer demand, and supportive financial conditions are likely to sustain investment activity. However, Fitch expects GDP growth to moderate slightly in the second half of FY26 (October–March).
For FY27, India’s GDP growth is projected at 6.3%, tapering further to 6.2% in FY28.
Fitch’s latest estimate stands higher than most comparable projections. The Finance Ministry’s Economic Survey had pegged growth between 6.3%–6.8% for FY26, while the Reserve Bank of India, ADB, and S&P Global Ratings have forecast growth at 6.5%. Moody’s expects 6.3%, IMF at 6.4%, and World Bank at 6.3%.
On inflation, Fitch said food price pressures are likely to stay subdued due to above-average monsoons and comfortable food stockpiles. It expects inflation to rise only moderately to 3.2% by end-2025 and 4.1% by end-2026.
Fitch also projects a 25 bps rate cut by the RBI later this year, with rates expected to remain unchanged through 2026, before tightening resumes in 2027.