\u2018Trump’s way of dealing with world a departure\u2019: Jaishankar says recent experience taught India to not rely on a single market; asserts strategic autonomy<\/a><\/p>\nIndia\u2019s GDP Growth Robust<\/p>\n
The country’s economic prospects remain favourable compared to peers, despite reduced momentum over the past two years. GDP growth projections stand at 6.5% for the fiscal year ending March 2026 (FY26), matching FY25, and exceeding the ‘BBB’ median of 2.5%, Fitch said.\u201c Domestic demand will remain solid, underpinned by the ongoing public capex drive and steady private consumption. However, private investment is likely to remain moderate, particularly given heightened US tariff risks. There has been a notable slowdown in nominal GDP growth, which we forecast to expand 9.0% in FY26, from 9.8% in FY25 and 12.0% in FY24,\u201d the ratings agency said.\u201cWe estimate potential GDP growth of 6.4%, led by strong public capex, a private investment pick-up and favourable demographics. We assume healthy corporate and bank balance sheets will spur an investment acceleration, but this may depend on better visibility over the domestic consumption outlook. The government’s deregulation agenda and GST reforms should support incremental growth. Passage of other significant reforms, especially on land and labour laws, seems politically difficult. Still, some state governments are likely to advance such reforms. India has signed several bilateral trade agreements, but trade barriers remain relatively high,\u201d it added.According to Fitch, a combination of declining food prices and the Reserve Bank of India’s (RBI) policy initiatives has maintained controlled inflation levels. The core inflation remains constant near the 4% midpoint within the RBI’s targeted range of 2%-6%. The headline inflation decreased to 1.6% in July, primarily due to reduced food costs. Between February and June 2025, the RBI reduced its policy repo rate by 100bps to 5.5%. There is potential for an additional 25bps reduction in 2025, supported by the current low inflation environment, it says.Also Read | \u2018Aggressive economic leverage\u2019: JD Vance says Trump applied secondary tariffs on India to force Russia to stop war; \u2018harder for Russians to\u2026\u2019<\/a>Credit expansion has decreased to 9.0% in May from 19.8% in the previous year, attributed to elevated policy rates and stricter macroprudential regulations on unsecured consumer lending. Nevertheless, we anticipate an increase in credit growth following the monetary relaxation measures.The central government’s fiscal management has shown notable improvement in recent years through enhanced transparency, better spending practices, and a steady commitment to fiscal consolidation by meeting or exceeding budgetary goals, says Fitch. The government’s deficit decreased to 4.8% of GDP in FY25, compared to 5.5% in FY24, marking a significant reduction from its FY21 peak of 9.2%. The consolidation was achieved through robust revenue increases and decreased subsidy expenditure, whilst maintaining increased capital expenditure, which grew to 3.2% of GDP in FY24 from approximately 1.5% in FY19. This increased capital spending is expected to address infrastructure deficiencies and enhance growth potential, it says.Also Read | \u2018If Indian goods cannot go to US, they can head to\u2026\u2019: Russia slams \u2018unjustified\u2019 Trump sanctions on oil; Putin to meet PM Modi in India this year<\/a>According to Fitch, India maintains its credit rating strength through solid external finances, supported by substantial foreign exchange reserves, positive net external creditor status, and minimal current account deficit (CAD).\u201cWe forecast a stable CAD at 0.7% of GDP in FY26 before rising gradually to a still modest 1.5% by FY28. FX reserves rose by USD59 billion to USD695 billion by 15 August 2025 from end-December 2024, around eight months of current external payment coverage,\u201d it says.<\/p>\n","protected":false},"excerpt":{"rendered":"India’s economic prospects remain favourable compared to peers. 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![\"Fitch](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/08\/123498491.jpg\" "\\"India's")
India’s economic prospects remain favourable compared to peers. (AI image) India\u2019s credit rating has been affirmed at \u2018BBB-\u2019 with a stable outlook by ratings agency Fitch. The confidence in India\u2019s growth story comes as a booster shot at a time when India faces 50% tariffs from the US for its exports.According to Fitch, India’s ratings benefit from substantial growth and robust external finances. The country’s consistent delivery of growth, coupled with macro stability and enhanced fiscal credibility, indicates progressive improvement in structural metrics, including GDP per capita, Fitch has said.This pattern suggests a potential modest reduction in debt over the medium term. However, fiscal metrics remain challenging, with substantial deficits, debt and debt service compared to ‘BBB’ peers. The rating faces limitations from underdeveloped structural metrics, including governance indicators and GDP per capita, Fitch said.Fitch’s affirmation of India’s ratings comes days after S&P upgraded India’s credit rating to ‘BBB’ from ‘BBB-‘. Both the US-based credit rating agencies have expressed confidence in India’s growth story at a time when US President Donald Trump has called it a ‘dead economy’.<\/p>\n