More Stories

Informist, Wednesday, Jun. 10, 2026

 

NEW DELHI – Fitch Ratings has cut India's GDP growth forecast for 2026-27 (Apr-Mar) by 30 basis points to 6.4% in view of the impact of the ongoing US-Iran war. The rating agency, however, raised its India growth projection for FY28 by 20 basis points to 6.7%. Economists at Fitch expect India's economic growth in FY28 to pick up due to the unwinding of the energy supply shock, coupled with stronger consumer spending and investment, according to a report on Tuesday.

 

Economists at Fitch Ratings see the slowdown in growth to be most apparent in the September and December quarters of the current financial year as rising prices erode real incomes and dampen consumer spending. "Domestic demand will be the main driver of growth, but lower imports in real terms imply positive contributions to growth from net external demand," Fitch said in its Global Economic Outlook – June 2026 report.

 

Noting the recent 4-5% hikes in petrol and diesel prices in the domestic market, economists expect capital spending to be more resilient as the fuel prices have been capped. According to them, credit growth is still showing a double-digit growth after it increased in March. "...loan demand has held up; and the government's fiscal plans envisage public capital expenditure to rise in line with nominal GDP," economists said in the report.

 

Earlier, Fitch had projected India's economic growth at 6.7% for FY27 and 6.5% for FY28. India's economy expanded 7.8% in the March quarter. The Reserve Bank of India Friday lowered India's FY27 growth forecast to 6.6%, 30 bps lower than its previous projections considering the risks arising from the war. The central bank also revised downwards its growth projection for all four quarters of FY27 by 20–50 bps. 

 

The price pressures continue to mount with no signs of an end to the West Asia war. Despite this, consumer price index inflation has not risen significantly. Fitch expects inflation to rise steadily over the months ahead, reaching 5.3% by the end of 2026. "This reflects a combination of base effects and higher energy prices," economists said. "Forecasts for below-average monsoon rains and the current heatwave in parts of India raise the risk of even stronger price rises."

 

CPI inflation rose to 3.48% in April from 3.4% in March, reflecting a minimal impact of the war at the consumer level. Whereas WPI inflation rose to a 42-month high of 8.30% in April from 3.88% a month ago.

 

With growth seen lower than previously projected and inflation seen higher, the RBI's Monetary Policy Committee on Friday unanimously voted to leave the policy repo rate unchanged at 5.25%. Going forward, economists at Fitch expect the central bank to change its course and increase rates "once this year to 5.5% to address the rising price pressures from the adverse supply shock."

 

Additionally, economists do not expect a further, significant depreciation in the Indian rupee over the rest of the year. "We expect the depreciating pressures to unwind to some extent as the energy shock subsides. We then expect modest depreciations over the next two years," economists at Fitch said.  End

 

Reported by Shweta

Edited by Akul Nishant Akhoury

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.