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Fitch Ratings on Thursday (June 22) raised its forecast for India’s economic growth to 6.3% for current fiscal year 2023-24 from 6% 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% GDP expansion in FY23. In the previous fiscal year (FY22), the economy had grown 9.1%.
“India’s economy has been showing broad-based strength — with GDP up by 6.1% year-on-year in 1Q23 (January-March) and autosales, 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%,” the rating agency said.
Fitch had in March lowered its forecast for 2023-24 to 6% from 6.2% 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% 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 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.