Expects activity to pick up Jan-Mar

Informist  New Delhi

India's economic growth is likely to stand at 6.5% in 2025-26 (Apr-Mar), before slowing down marginally to 6.3% in FY27, Fitch Ratings said. India's GDP is seen expanding at a four-year low pace of 6.5% in the current year, as per the government's second advance estimate, but Fitch expects growth in FY25 to be lower at 6.3%. 

Fitch's projection for GDP growth in FY26 is lower than Reserve Bank of India's forecast. The central bank has projected the Indian economy to grow 6.7% in FY26, while the government pegged growth at 6.3-6.8% in the Economic Survey. On Monday, the Organisation for Economic Cooperation and Development said it expects India's GDP to grow 6.4% in FY26, 50 basis points lower than previously expected.

GDP growth recovered to 6.2% in Oct-Dec from a seven-quarter low of 5.6% in Jul-Sept. Fitch expects a further pick-up in GDP growth in Jan-Mar to 7.1%. "Business confidence remains high and lending surveys point to continued double-digit growth in bank lending to the private sector," Fitch said in its Global Economic Outlook report for March. 

"The Union Budget implies continued high levels of public capital expenditure, while we assess that the budget will be broadly neutral for growth. These factors - together with a reduction in the cost of capital - underpin our expectation of a pick-up in capital spending for FY26 and FY27," the rating agency said.