India's growth forecast for FY25 raised to 7.2% from 7% by Fitch

India's growth forecast for the fiscal year 2024-’25, or FY25, has been raised to 7.2 per cent by Fitch ratings on Friday, from its March projection of 7 per cent. The American credit rating agency added that improved investment opportunities and recovery in consumer spending has led to the higher adjustment in rating for India.

The latest estimate from Fitch is in sync with that of the Reserve Bank of India (RBI), which had also pinned India’s growth rate at 7.2 per cent for the 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),” the Global Economic Outlook 2024 report of Fitch said.

The credit rating agency also released its latest projected growth rates of India for the immediate upcoming fiscal years. For the fiscal year 2025-’26, or FY26, Fitch expects a growth rate of around 6.5 per cent, while the rate should be around 6.2 per cent in 2026-’27.

According to Fitch, investment in India would continue to increase, although at a slower pace compared to recent quarters.

“We expect growth in later years to slow and approach our medium-term trend estimate,” Fitch said.

The credit rating agency predicts that by the end of 2024, inflation should drop to 4.5 per cent and remain around 4.3 per cent over the next two years. This year, the RBI can be expected to cut policy interest rate to 6.25 per cent, by 25 basis points. India’s economy surged 8.2 per cent in FY24, while the March quarter saw a growth of 7.8 per cent.