Fitch Revises India's Growth Forecast Amid Global Trade Challenges

Fitch Ratings projects India's GDP growth to reach 6.5% in FY25-26 and slightly decrease to 6.3% in FY26-27 despite global trade tensions, emphasizing India's economic resilience due to self-sufficiency. The growth is supported by strong domestic spending, a robust agricultural sector, and positive fiscal policies.

Fitch Ratings has adjusted India's GDP growth forecast to 6.5% for the fiscal year 2025-26 and 6.3% for 2026-27, primarily due to a global trade war initiated by the US. Despite external pressures, India's economy shows resilience, thanks to its considerable self-sufficiency.

The agency notes a significant comeback in India's GDP growth in Q4FY25 to 6.2%, up from 5.4% in the previous quarter, driven by increased private and public spending. The agricultural sector has also played a critical role, boasting higher yields due to favorable monsoon rains.

Business confidence remains high, as evidenced by strong lending activity and government commitment to capital expenditure. Fitch anticipates a boost in consumer spending from revised tax policies and expects inflation to stabilize following a reduction in rates by the Reserve Bank of India.