Fitch Upgrades India's Growth Outlook: Domestic Demand Drives Economic Surge

Global rating agency Fitch has upgraded India's growth outlook for the fiscal year ending March 2026 to 6.9 percent from 6.5 percent, as stated in its June Global Economic Outlook (GEO) report.

Driven by stronger-than-expected growth between the first and second quarter of FY25, domestic demand is anticipated to play a pivotal role in this upward revision. Consumer spending is being bolstered by solid real income dynamics, while looser financial conditions are likely to encourage investment.

Despite this positive trend, Fitch cautioned that India's economic momentum might slow in the latter half of the fiscal year as the economy currently operates slightly above its potential. Challenges include rising trade tensions with the U.S., highlighted by a 25 percent tariff increase on Indian imports, which could affect business sentiment and investment. Additionally, inflation has decreased significantly, influenced by low food prices, prompting expectations of a regulatory rate cut by the Reserve Bank of India later this year.