New Delhi, June 9 (IANS). Global credit rating agency Fitch Ratings has retained India’s GDP growth forecast for fiscal year 2026-27 at 6.4 percent. The agency says that the ongoing crisis in West Asia and the situation in the global oil market may affect the pace of the Indian economy in the coming quarters.
Fitch said in its report, “We are estimating GDP growth rate to be 6.4 percent in FY 2027, which is 0.3 percent lower than the estimate released in March.”
According to the report, domestic demand will remain the main driver of economic growth. However, net external demand is also expected to contribute positively to growth due to decline in imports in real terms.
Fitch believes that India’s economic growth may pick up pace again after the crisis in West Asia subsides in fiscal year 2028. Due to strong consumer spending and investment, GDP growth rate is estimated to be 6.7 percent in fiscal year 2028.
After this, the growth rate is expected to gradually return to its normal level at 6.4 percent in the financial year 2029.
Fitch chief economist Brian Coulton said rising oil prices are weighing on global economic growth prospects and increasing risks.
However, he said that there is a tremendous increase in expenditure on information technology (IT) across the world, due to which the negative impact on economic activity is being balanced to some extent, especially in Asian countries.
Fitch said that Consumer Price Index (CPI) based inflation in India has not increased much yet, but it may see a sustained increase in the coming months.
The agency estimates that inflation may reach 5.3 percent by the end of 2026. Base effect and increase in energy prices will be the main reasons behind this.
The report also said that a below-normal monsoon and the ongoing scorching heat in some parts of the country could further increase food prices, leading to further inflationary pressure.
Regarding the Indian rupee, Fitch said that it does not expect any major decline in the rupee in the rest of this year.
According to the agency, there may be limited fluctuations in the Indian currency, but the possibility of large-scale depreciation is not visible at the moment.
It is noteworthy that the Reserve Bank of India (RBI) last week had estimated the real GDP growth rate for the financial year 2027 at 6.6 percent.
According to RBI, the growth rate is estimated to be 6.6 percent in the first quarter, 6.3 percent in the second quarter, 6.5 percent in the third quarter and 6.8 percent in the fourth quarter.
However, the central bank has also warned that prolonged disruptions in global supply chains, instability in international financial markets and weather-related shocks could have a negative impact on the growth of the Indian economy.
–IANS
DBP
