Fitch Raises India's FY26 GDP Forecast

• Fitch upgrades India's FY26 GDP forecast to 6.9% from 6.5% on strong demand.
• RBI expected to cut rates by 25 bps in late 2025, then raise them in 2027.
• Fitch projects India's inflation rising to 4.1% by 2026; US tariffs to ease.

Fitch Report On India: Credit rating agency Fitch on Wednesday said that GST reforms will modestly boost consumer spending starting in FY26 and continuing

beyond. It has upgraded India's FY26 GDP growth forecast from 6.5 per cent to 6.9 per cent. The key driver of this growth is strong domestic demand, fueled by robust consumer spending. Looser financial conditions are expected to support increased investment.

#BREAKING | Fitch upgrades India’s FY26 GDP forecast to 6.9%, sees strong consumer demand, RBI rate cuts this year, and US tariffs likely negotiated lower#IndiaEconomy #GDP #RBI #GST #Trade pic.twitter.com/AOgGqdDhsr

— ET NOW (@ETNOWlive) September 10, 2025

The Reserve Bank of India (RBI) is projected to cut the repo rate by 25 basis points toward the end of this year. Furthermore, the RBI is expected to begin raising the repo rate in 2027.

The agency also foresees India's inflation rising to 3.2 per cent by the end of 2025 and further increasing to 4.1 per cent by the end of 2026.

Also, India's GDP growth is expected to slow down to 6.3 per cent in FY27 and 6.2 per cent in FY28.

Fitch anticipates that the extra 25 per cent tariff imposed by the US on India will eventually be negotiated lower.

However, US trade relation issues are likely to dampen India's business sentiment and investment.