Fitch Ratings revises upward India’s GDP growth forecast to 7.5% for FY26 on higher domestic demand

Despite the ongoing conflict between Iran-US and Israel, Fitch Ratings in its Global Economic Outlook- March 2026 has raised India’s Gross Domestic Product (GDP) growth forecast marginally to 7.5% for the current fiscal year 2025-26 (FY26) from 7.4% projected earlier in December 2025.

The upward revision in growth estimation is attributed to domestic demand, which will be the biggest growth driver this year, with consumer spending and investment rising by (an estimated) 8.6% and 6.9% in the current fiscal year.

Similarly, the ratings agency has revised its growth estimate for FY27 upwards to 6.7%, from 6.4% projected in December 2025. It further projected world GDP growth at 2.6% in 2026 on the assumption that the Iran war does not result in a larger or an enduring spike in energy prices that pushes the annual 2026 oil price forecast above $70/barrel. But it noted that a scenario where oil prices rise to $100 and stay there would be a significant adverse global supply shock.

With regard to India, Fitch said there are tentative signs that real activity is slowing in January and February, but the economy remains resilient, and credit growth is still in double digits. It expects growth to slow in first half of FY 2026-27; with rising inflation constraining real incomes and limiting consumer spending growth. Meanwhile, India’s GDP growth slowed in the December quarter to 7.8% YoY from 8.4% in the September quarter.

Meanwhile, Crisil Intelligence in its latest report, has said that the real gross domestic product (GDP) growth of India is likely to moderate but remain healthy at 7.1% in fiscal year 2026-27 (FY27) compared with 7.6% in FY26 (revised under the new GDP series). It noted that conflict in West Asia, if prolonged, could pose a downside risk to India's economic outlook due to its impact on crude oil and commodity prices.