Fitch Raises India FY27 GDP Growth Forecast to 6.9%

Fitch Ratings has increased the forecast of GDP growth rate of India in FY27 to 6.9%, which is up from its initial prediction of 6.4%, as the rating agency has seen higher economic activities than expected. This was done on account of India’s 7.8% growth in June quarter, amid the pressure of foreign economy and decline in its terms of trade during the first six months of 2026. Fitch also expects slowing momentum in economy in the remaining part of fiscal year. There can be some slowing down in activities of manufacturing and services, along with poor monsoon and inflation in economy.

Why Fitch Increased Growth Forecast for India’s GDP

The main reason for the positive revision is better-than-expected economic growth in the June quarter. India witnessed GDP growth of 7.8%, reflecting robustness amid the surprise caused by the US-Iran war, and increased strain on its terms of trade.

Fitch projects the Indian economy to register 6.9% growth in FY27, up from 6.4% projected earlier in June.

It expects better private investments too, with the growth in investments exceeding 10%. Non-food credit growth was 19% on a year-on-year basis in July.

Risks of Growth Persist Through FY27

While revising their expectations positively, Fitch foresees slower economic growth in the remaining quarters of FY27.

Survey indicators like PMI indicate that growth in the manufacturing sector is expected to slow down while there will also be a deceleration in the growth in the services sector. The below-normal rainfall of monsoon could impact agricultural production and demand. Furthermore, higher inflation would mean lower income, hence, reduced consumer expenditure.

Thus, it can be inferred that FY27 would see the second half weaker than the first quarter.

Rate Expectations for RBI

According to the rating agency, the Reserve Bank of India (RBI) is likely to hike the policy rate by 25 basis points at the monetary policy meeting of October.

As per the forecast, the rate could reach 5.5%, before reaching 5.75% in 2027. Fitch also expects that rates will ease back to 5.5% in 2028.

This forecast takes into account strong demand, price pressure, and supply side considerations.

Growth Projections by Other Agencies

The forecast by Fitch is more or less similar to that of other major rating agencies. Just before Fitch’s announcement, S&P Global Ratings had forecast India’s GDP growth rate for FY27 at 7%.

The growth rate forecasted by Moody’s Rating was also 7% for the same fiscal year.

India’s economy had grown by 7.8% in FY26.