Fitch raises India's GDP forecast to 6.9% in 2025-26

In a major boost to India's economic prospects, Fitch Ratings has upgraded the country's projected growth outlook for the financial year 2025-26. The rating agency has raised its forecast to 6.9 percent, a notable increase from its earlier projection of 6.5 percent. This optimistic revision is a direct result of robust domestic demand and supportive financial conditions, which have given the Indian economy a strong momentum. The move highlights the confidence of international agencies in India's economic resilience and potential for sustained growth.

The upgraded forecast follows a surprisingly strong performance in the first quarter of FY26. According to a report by Moneycontrol, India's GDP grew at an impressive rate of 7.8 percent, surpassing the 7.4 percent growth recorded in the previous quarter (Q1 FY26). This significant jump has provided the basis for Fitch's more positive outlook, as the initial growth impulse appears much stronger than anticipated.

While the outlook is positive, Fitch Ratings has also pointed out certain risks that could dampen the projected growth. The agency flagged rising tensions with the US as a potential concern, noting that such geopolitical issues could negatively impact investor sentiment, even with ongoing negotiations to reduce customs duties. Looking further ahead, Fitch projects a slight easing in India's growth to 6.3 percent in FY27 and 6.2 percent in FY28, suggesting that while growth will remain strong, the extraordinary pace seen in early FY26 may not be sustained throughout the year.

The Ministry of Statistics & Programme Implementation has provided detailed figures confirming the strong first-quarter performance. The real GDP, which measures economic output at constant prices, is estimated to have grown by 7.8 percent in Q1 of FY 2025-26, compared to a 6.5 percent growth in the same period of the previous year. The real GDP figure for the quarter stands at Rs 47.89 lakh crore, up from Rs 44.42 lakh crore in the year-ago quarter.

The report also shows impressive growth in key sectors of the economy. The agriculture and allied sectors saw a real Gross Value Added (GVA) growth rate of 3.7 percent, a significant improvement from the 1.5 percent growth in Q1 of the last financial year. Secondary sectors, including manufacturing and construction, performed exceptionally well, both registering growth rates of over 7.5 percent at constant prices.