Fitch Upgrades India’s 2025 GDP Growth Forecast to 7.4% on Strong GST Reforms

New Delhi, Dec 04 : Fitch Ratings on Thursday upgraded India’s GDP growth forecast for the current fiscal year to 7.4%, up from its earlier projection of 6.9%, citing robust consumer spending and improved economic sentiment boosted by recent GST reforms.

According to Fitch’s December Global Economic Outlook, falling inflation provides the Reserve Bank of India (RBI) room for an additional policy rate cut to 5.25% in December, following a total of 100 basis points of cuts in 2025 so far. The report also noted reductions in the cash reserve ratio, from 4% to 3%, as supportive measures for economic activity.

“Growth is expected to ease over the remainder of FY26, but stronger domestic demand and policy support have led us to raise our full-year forecast to 7.4%,” Fitch said.

The rating agency highlighted private consumer spending as the key growth driver, aided by rising real incomes, enhanced consumer sentiment, and the implementation of goods and services tax (GST) reforms, which have streamlined taxation and boosted market confidence.

In Q2 (July-September), GDP growth accelerated to 8.2%, up from 7.8% in Q1, demonstrating sustained momentum in domestic consumption. Fitch projects that private investment will pick up in the second half of FY26 as financial conditions continue to ease.

Looking ahead, Fitch forecasts a moderation in GDP growth to 6.4% in FY27 but expects inflation to stabilize, signaling the end of the RBI’s easing cycle, with interest rates likely to remain at 5.25% over the next two years.