Fitch Raises India FY26 Growth Forecast to 7.4% on High Consumer Spending

Fitch Ratings has revised its FY26 growth outlook for India to 7.4%, an upgrade from its earlier forecast of 6.9%.  

The rating agency attributed the improvement to robust consumer spending, strengthened household purchasing power and the positive influence of recent GST-related reforms on overall demand conditions. 

Key Development: Revised Growth Forecast and Inflation Trends 

Fitch stated that private consumer spending is the main driver of growth this year, supported by strong real income dynamics, increased consumer sentiment and expectations that lower effective tariff rates will aid external demand.  

The revised projections were released shortly after government data showed India’s GDP rising 8.2% in the second quarter of FY26, the fastest in six quarters and significantly higher than 5.6% recorded a year earlier. 

Consumer price inflation declined to an all-time low of 0.3% in October, largely due to a 3.7% fall in food and drink prices. Food inflation has remained negative since June, supported by above-average monsoon rainfall and adequate food stocks.  

Policy Outlook and Medium-Term Growth 

Fitch expects growth to moderate to 6.4% in FY27 in line with its trend assessment. Domestic demand, particularly consumer spending, will remain the major contributor. 

For FY28, Fitch projects growth of 6.2%, noting that higher imports will offset slightly stronger domestic demand. India faces one of the highest effective tariff rates on exports to the United States at about 35%. 

Read More: India-Russia Trade Deficit in Focus Ahead of Putin’s Visit! 

Conclusion 

Fitch’s upward revision to India’s FY26 growth outlook reflects a combination of strong consumption dynamics, favourable inflation trends and ongoing structural reforms. While moderation is expected in the following years, India remains positioned for steady medium-term expansion supported by resilient domestic demand and improving investment conditions. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.  

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.