News Brief
Services Surge, Consumption Boost: Fitch Upgrades India’s FY26 Growth to 6.9 Per Cent
Illustration: India's Map and GDP's Acronym
Credit rating agency Fitch Ratings has revised India’s FY26 growth outlook upward to 6.9 per cent, compared to its earlier 6.5 per cent estimate, Moneycontrol reported.
The upgrade reflects robust domestic demand and favorable financial conditions.
The move comes after India's stronger-than-expected Q1FY26 GDP growth of 7.8 per cent, higher than 7.4 per cent in the previous quarter.
The services sector recorded a sharp rise of 9.3 per cent compared to 6.8 per cent earlier.
On the demand side, consumption spending by both households and the government remained the main growth engine, with private consumption alone expanding 7 per cent in April–June.
Fitch, however, cautioned about external risks, particularly from escalating trade frictions with the US, which recently levied a 50 per cent tariff on Indian imports in August.
Although the agency expects the duties to be reduced eventually, it warned that prevailing uncertainty may dampen investor confidence.
The Composite PMI index climbed to a 17-year peak in August, while industrial production hit a four-month high.
GST reforms implemented in September are also expected to provide a modest lift to consumer spending through FY26.
Economists estimate that recent GST reductions could add at least 10 basis points to overall growth.
Looking ahead, Fitch projects growth moderating to 6.3 per cent in FY27 and 6.2 per cent in FY28.
While domestic demand is expected to stay resilient, the strong growth momentum seen in early FY26 may fade in the latter part of the year, the agency said.
