Fitch Revises India's FY27 GDP Growth Forecast to 6.4% as Energy Costs Rise

As per PTI reports, Fitch Ratings has lowered India's GDP growth forecast for FY27 to 6.4%, compared with its earlier estimate of 6.7%. The agency attributed the revision to higher oil prices linked to the ongoing US-Iran conflict, which it expects will affect economic activity during the current fiscal year. 

The revised estimate follows 7.4% GDP growth in FY26, with Fitch expecting a moderation in consumption as inflation reduces household purchasing power. 

Oil Prices and Inflation Concerns 

The agency said higher fuel and energy costs are likely to weigh on demand, particularly during the September and December quarters of FY27. Fuel prices have increased by around 4-5% in recent weeks, adding to cost pressures across the economy. 

Fitch has revised its 2026 Brent crude oil assumption to $87 per barrel, up from the $70 per barrel projected earlier, following disruptions in global oil supplies. 

Inflation Expected to Rise 

The report expects inflation to increase gradually over the coming months, with the rate projected to reach 5.3% by the end of the calendar year. Consumer inflation was 3.5%, while wholesale inflation stood at 8.3% year-on-year in April. 

Fitch also noted that forecasts of below-normal monsoon rainfall and heatwave conditions could add pressure to food prices, increasing inflation risks further. 

Global Outlook Also Trimmed 

The agency lowered its global growth forecast for 2026 to 2.4%, a reduction of 0.2 percentage points, citing the impact of the oil price shock on the world economy. At the same time, it said investment and technology spending could partly offset the slowdown in some regions. 

Fitch expects India's GDP growth to recover to 6.7% in FY28 before easing to 6.4% in FY29, in line with its longer-term trend. 

Read More: India's Current Account Posts $7.1 Billion Surplus in Q4 FY26! 

Conclusion 

Fitch's revised outlook points to slower economic growth in FY27 as higher energy costs and global uncertainties weigh on domestic demand. Inflation and oil price movements are expected to remain key factors during the year. 

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