Fitch Ratings Raises India's FY26 GDP Growth Forecast to 6.9%
Fitch Ratings has revised India's GDP growth forecast for the fiscal year ending March 2026 (FY26) upward to 6.9%, a notable increase from its earlier projection of 6.5%. The upgrade is attributed to a sharp acceleration in economic activity in the April-June quarter, which surpassed expectations with 7.8% year-on-year growth. Fitch cited strong domestic demand, robust real income dynamics supporting consumer spending, and looser financial conditions as key drivers for the positive revision, though it projects a slowdown in subsequent years.
Unpacked:
Fitch’s 6.9% growth forecast for FY26 is higher than the Reserve Bank of India’s estimate of 6.5% and State Bank of India’s projection of 6.3% for the full fiscal year. Deloitte’s baseline scenario expects growth between 6.4% and 6.7%. Fitch is the first major global agency to upgrade its forecast after earlier downward revisions by others.
Fitch expects growth to slow in FY27 and FY28 due to the economy operating above its potential, less supportive financial conditions, and possible global economic headwinds. Trade tensions, especially with the US, and disruptions to global supply chains could also negatively impact growth.
Recent trade tensions have led to the US imposing additional tariffs on Indian imports, raising duties to 50% on some goods as of August 2025. While these could dampen export growth, Fitch and other analysts still project robust domestic demand to offset short-term trade uncertainties. A trade deal is anticipated, which may ease tensions.
Domestic demand is the primary driver of India’s recent economic acceleration, supported by strong real income growth and consumer spending. Looser financial conditions, increased private investments, and robust service sector performance have further fueled this momentum, helping India’s economy outperform earlier forecasts despite external challenges.