New Delhi: American credit rating agency Fitch has revised India’s gross domestic product (GDP) for the financial years 2023-24 and 2024-25, attributing the change to burgeoning domestic demand and heightened business and consumer confidence.

In its latest Global Economic Outlook, the agency elevated the FY24 estimate to 7.8 percent from the previous 6.9 percent and the FY25 estimate to 7 percent from 6.5 percent earlier. Fitch also tempered its expectations of future rate cuts, anticipating a more conservative approach.

Fitch highlighted that India’s GDP growth has surpassed 8 percent for three consecutive quarters, projecting a slight moderation in momentum in the final quarter of the current fiscal year, with an estimated growth rate of 7.8 percent for FY24, a notable 10.6 percent growth in investment year-on-year, and a 3.5 percent rise in private consumption.

The revision aligns with similar adjustments made by other global ratings agencies, S&P and Moody’s following India’s 8.4 percent GDP growth in the October-December quarter, marking the country as the fastest-growing economy globally. Although Fitch’s projections for FY24 surpass the government’s revised estimates of 7.6 percent, they fall short of Reserve Bank of India chief Shaktikanta Das’s estimate of nearly 8 percent.

Anticipating a robust growth outlook, Fitch expects the RBI to implement a 50 basis points rate cut from July to September. Revising its earlier estimate down from 75 basis points in December. The agency emphasized the importance of food prices in influencing inflation dynamics and projected headline retail inflation to reach 4 percent by the end of December 2024, assuming a cooling of food prices.

Meanwhile, India's central bank remains committed to achieving its 4 percent inflation target on a sustainable basis, amidst evolving economic conditions.

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