Fitch Ratings has predicted that India’s GDP growth will be 7.2% for the 2024-25 fiscal year. This is 0.2 percentage points higher than the 7% GDP growth for India predicted by Fitch Ratings in its March 2024 Report. Its latest Global Economic Outlook(GEO) report released on June 18, 2024 highlights that India’s real GDP grew by 8.2% during Financial Year(FY) 2023/24, due to strong domestic demand. Investment also rose by 9.0% and consumer spending increased by 4.0%.
“We expect the Indian economy to expand by a strong 7.2% in FY24/25 (an upward revision of 0.2 pp from the March GEO),” says the report. Consumer spending is expected to recover as consumer confidence remains high. The expectation of a normal monsoon season ahead should boost growth and stabilize inflation, although a recent heatwave poses a risk, says the latest report of Fitch Ratings.
The report further mentions that Consumer price inflation has decreased since the beginning of the year, with annual inflation at 4.7% in May compared to 5.7% in December 2023. Core inflation has been decreasing more steadily, falling to 3.0% in May from 3.8% in December. However, food price inflation has remained high, averaging 7.8% in the first five months of the year. As per forecasts, rainfall from June to September is expected to be above average, which should help mitigate inflation risks from increase in food prices. Headline inflation is expected to continue its decline, reaching 4.5% by the end of the year and averaging 4.3% in 2025 and 2026, slightly above the mid-point of its target range (4% +/- 2%).
The report also mentions that although investment growth will continue, it will do so at a slower pace
| India – Forecast Summary | |||||
| (%) FY starting April | Annual Avg. 2019-2023 | FY23-24 | FY24-25F | FY25-26F | FY26-27F |
| GDP | 4.6 | 8.2 | 7.2 | 6.5 | 6.2 |
| Consumer spending | 4.5 | 4.0 | 6.7 | 5.1 | 4.9 |
| Fixed investment | 5.4 | 9.0 | 7.2 | 7.8 | 7.7 |
| Net trade (contribution pp) | 0.1 | -2.0 | 2.1 | 0.5 | 0.4 |
| CPI inflation (end-cal. year) | 5.6 | 5.7 | 4.5 | 4.3 | 4.2 |
| Policy interest rate (end-cal. year) | 5.09 | 6.50 | 6.25 | 6.00 | 5.75 |
| Exchange rate, USDINR (end-cal. year) | 75.93 | 83.12 | 83.20 | 83.00 | 83.00 |
| Source: Fitch Ratings |