Business

India’s GDP Growth Projection Upgraded To 6.9% For FY26 By Fitch Ratings

Fitch Ratings has upgraded India’s GDP growth forecast for the financial year 2025-26 to 6.9% from its earlier estimate of 6.5%.

This revision comes on the back of strong domestic demand and supportive financial conditions, marking a positive outlook for the country’s economy.

The upgrade follows India’s surprising 7.8% growth in the first quarter of FY2025-26, which surpassed expectations and demonstrated resilience in the face of global economic challenges.

According to the Ministry of Statistics & Programme Implementation (MoSPI), real GDP at constant prices stood at Rs 47.89 lakh crore in Q1 FY26, up from Rs 44.42 lakh crore in the same quarter last year.

Nominal GDP, which includes inflation effects, rose by 8.8% in this period.

Sector-wise Growth Highlights

Agriculture and allied sectors grew by 3.7% in real terms, an improvement from 1.5% in Q1 of the previous year.

The secondary sector also performed well, with manufacturing and construction posting growth rates of 7.7% and 7.6%, respectively.

However, mining and quarrying contracted by 3.1%, while utilities like electricity and gas saw marginal growth at 0.5%.

The tertiary sector, which includes services, recorded a significant growth of 9.3%, up from 6.8% in Q1 FY25, underscoring the continued strength of the services-driven economy.

While Fitch remains optimistic, the agency cautioned about certain risks that could affect growth.

Rising geopolitical tensions between India and the United States may dampen investor sentiment despite ongoing negotiations to reduce customs duties.

Fitch projects growth to moderate to 6.3% in FY27 and further to 6.2% in FY28.

The agency expects domestic demand to remain the primary driver of growth, but the strong momentum witnessed in early FY26 may not sustain through the year’s second half.

The MoSPI highlighted the strong performance in Q1, with real GDP growing at 7.8% compared to 6.5% a year earlier.

This growth rate underscores India’s position as one of the fastest-growing major economies globally.

India’s upgraded GDP growth forecast reflects robust economic fundamentals and a favourable domestic environment.

Despite some external risks, the country’s diverse economy, led by strong performance in agriculture, manufacturing, construction, and services, positions it well for continued growth.

Policymakers and investors alike will be watching closely as the year unfolds to see if India can sustain this momentum.

Also Read: GST Reform Set To Revive India’s Housing Market Amid Changing Demand

Anamika Agarwala

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