New Delhi, June 9: Global credit rating agency Fitch Ratings has kept India’s GDP growth forecast for the fiscal year 2026-27 at 6.4%. The agency warns that the ongoing crisis in West Asia and the current state of the global oil market could impact the pace of the Indian economy in the upcoming quarters.
In its report, Fitch stated, “We estimate the GDP growth rate for fiscal year 2027 to remain at 6.4%, which is 0.3% lower than the forecast released in March.”
According to the report, domestic demand will continue to be the main driver of economic growth. However, a decrease in imports is expected to contribute positively to net external demand.
Fitch believes that after the West Asia crisis subsides in fiscal year 2028, India’s economic growth may regain momentum. Strong consumer spending and investments are projected to push the GDP growth rate to 6.7% in fiscal year 2028.
Following this, the growth rate is expected to gradually return to its normal level of 6.4% in fiscal year 2029.
Fitch’s chief economist, Brian Coulton, noted that rising oil prices are affecting global economic growth prospects and increasing risks. However, he mentioned a significant increase in global spending on information technology (IT), which is somewhat balancing the negative impacts on economic activities, especially in Asian countries.
Fitch also reported that inflation based on the Consumer Price Index (CPI) in India has not risen significantly yet, but a continuous increase is expected in the coming months. The agency estimates that inflation could reach 5.3% by the end of 2026, driven mainly by base effects and rising energy prices.
The report further indicated that below-normal monsoon conditions and extreme heat in some parts of the country could drive food prices higher, adding to inflationary pressures.
Regarding the Indian rupee, Fitch does not anticipate any significant depreciation for the remainder of the year. The agency expects limited fluctuations in the Indian currency, with no major depreciation currently in sight.
Notably, the Reserve Bank of India (RBI) last week projected a real GDP growth rate of 6.6% for fiscal year 2027. According to the RBI, growth rates are expected to be 6.6% in the first quarter, 6.3% in the second quarter, 6.5% in the third quarter, and 6.8% in the fourth quarter.
However, the central bank also warned that prolonged disruptions in global supply chains, instability in international financial markets, and weather-related shocks could negatively impact India’s economic growth.
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