Business EconomyPosted at: Dec 4 2025 9:23PM


Fitch raises India's GDP growth forecast to 7.4 per cent, boost due to GST reforms

New Delhi, Dec 4 (UNI) Fitch Ratings on Thursday raised India's Gross Domestic Product (GDP) growth forecast for the current fiscal to 7.4 per cent, from its earlier forecast of 6.9 per cent.
Increased consumer spending and improved sentiment boosted by GST reforms was sighted as the main reason for the revision.
Fitch Ratings said falling inflation gives the Reserve Bank of India (RBI) room for one more policy rate cut in December to 5.25 per cent, following 100 bps of cuts in 2025 so far.
"Growth will ease over the remainder of the financial year 2025-26 (to end-March), but we have raised our full-year growth forecast to 7.4 per cent, from 6.9 per cent in September," Fitch said in its Global Economic Outlook report for December.
"We expect falling inflation should give the RBI room for one more policy rate cut in December to 5.25 per cent, following 100 bp of cuts in 2025 so far, and a series of reductions in the cash reserve ratio (from 4 per cent to 3 per cent)," Fitch said.
It further projected the private investment to pick up in the second half of the next fiscal as financial conditions loosen. Notably, the consumer price inflation fell to an all-time low of 0.3 per cent in October, driven by lower food and drink prices.
Fitch expects GDP growth to slow to 6.4 per cent in FY'27. The GDP growth accelerated further in the July-September quarter to 8.2 per cent, from 7.8 per cent in the April-June quarter.
With core inflation recovering and activity projected to remain strong, Fitch said that it expects the RBI to have reached the end of its easing cycle, and that rates will remain at 5.25 per cent over the next two years.
The RBI is set to announce its monetary policy committee meeting decision on Friday.
Fitch also said the private consumer spending is the main driver of growth this year.
It was supported by strong real income dynamics, increased consumer sentiment, and the impact of recently implemented goods and services tax (GST) reforms.
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