Fitch upgrades India’s growth rate to 7.2%

Following the trend of upward revisions of India’s growth projections, Fitch Ratings today pegged GDP expansion during 2024-25 at 7.2 per cent, up from its March outlook of 7 per cent.

“Investment will continue to rise but more slowly than in recent quarters, while consumer spending will recover with elevated consumer confidence. Purchasing managers survey data point to continued growth at the start of the current financial year,” the global ratings agency said in its Global Economic Outlook.

The revision, it said, comes in the wake of the government revising the growth rate for 2023-24 to 8.2 per cent on account of stronger manufacturing, construction, and investment performance.

Growth, however, is expected to slow down in the subsequent years, Fitch said, forecasting it 6.5 per cent in the next fiscal and to 6.2 per cent in 2026-27.

But inflation, Fitch said, will continue to fall, to 4.5 per cent by the end of 2024 and 4.3 per cent next year. “Signs of the coming monsoon season being more normal should support growth and make inflation less volatile, though a recent heatwave poses a risk,” Fitch said.

While inflation fell to a 12-month low of 4.75 per cent in May, food inflation remained high at 8.7 per cent.