Fitch raises GDP forecast to 6.9%, says reforms to boost consumption

The ratings agency, which affirmed India’s ‘BBB-‘ rating with a ‘stable outlook’ in August, said the impact on the sovereign credit profile will be limited, however, revenue collections for the rest of the financial year will be lower than estimated. It also expects the government to curb expenditure for the rest of the fiscal year. “We anticipate the Centre will adjust spending to keep the deficit to the 4.4% of GDP budget target for FY26,” it said.

The ratings agency also raised the growth forecast for India to 6.9% from 6.5% earlier. It estimates the fiscal cost of the reforms to be around 0.2% of GDP annually, but the potential boost to consumption and growth will depend on the extent to which companies pass on lower taxes to consumers.