New Delhi: Fitch Ratings on Thursday raised its forecast for India's economic growth to 6.3 percent for the current fiscal year 2023-24 from 6 percent it had predicted previously. This is primarily because of a stronger outturn in the first quarter and near-term momentum. The growth forecast compares with 7.2 percent GDP expansion in FY23. In the previous fiscal year (FY22), the economy had grown by 9.1 percent.
"India's economy has been showing broad-based strength - with GDP up by 6.1 percent year-on-year in Q123 (January-March) and auto sales, PMI surveys and credit growth remaining robust in recent months - and we have raised our forecast for the fiscal year ending in March 2024 (FY23-24) by 0.3 percentage points to 6.3 percent," the rating agency said.
Fitch had in March lowered its forecast for 2023-24 to 6 percent from 6.2 percent citing headwinds from elevated inflation and interest rates along with subdued global demand. For 2024-25 and 2025-26 fiscal years, it estimated a growth of 6.5 percent each. Inflation has moderated since and the domestic economy has picked up.
Stating that the GDP growth in January-March was higher than expected, Fitch said that there has been a recovery in manufacturing, after two consecutive quarterly contractions, a boost from construction and an increase in farm output. In expenditure terms, GDP growth was driven by domestic demand and a boost from net trade.