India's GDP to grow at 6.9% in FY27: Fitch Ratings
What's the story
Fitch Ratings has revised its forecast for India's GDP growth in FY27, increasing it from 6.4% to 6.9%. The revision comes as a result of the country's economic resilience amid the US-Iran war shock. "GDP growth in India accelerated in 4QFY26 to 8.6% yoy, from 7.7% in 4Q25, in contrast to our expectations of a slowdown," Fitch said in its latest report.
Projections
FY26 growth forecast revised to 7.8%
Fitch's growth forecast for FY26 has also been revised upward to 7.8%, from an earlier estimate of 7.4% in its June Global Economic Outlook (GEO).
The agency expects a moderation in growth for the remainder of the financial year, citing PMI survey data that indicates a slower pace of expansion in manufacturing and services sectors.
Economic challenges
Concerns over below-normal monsoon rains
Fitch has also expressed concerns over below-normal monsoon rains, which could impact agricultural growth and rural demand.
The agency expects rising inflation to constrain real incomes and consumer dynamics.
However, it remains optimistic about private investment remaining strong with a forecasted rise of over 10%.
Non-food credit growth hit 19% year-on-year in July, indicating robust financial activity.
Inflation expectations
Fitch expects RBI to hike interest rates
On the inflation front, Fitch has noted that headline inflation rose from 1.2% in December 2025 to 4.8% in August.
Food price inflation has been rising steadily while core inflation increased from 3% to 4.2%.
The agency expects headline inflation to peak at 5.5% by December this year before easing off.
It also predicts RBI will hike interest rates by 25 basis points in October to counter rising prices and stabilize the economy.