NEW DELHI: Fitch Ratings on Thursday raised its growth outlook for India to 6.3% for FY24 from its earlier projection of 6% on the back of robust credit growth and auto sales in recent months. The rating agency also expects the Reserve Bank of India to continue with its pause on interest rate hike and go for rate cut early next year. It is to be noted that earlier, the global rating agency had said that the apex bank would go for at least another 0.25% hike in interest rates.
“India’s economy has been showing broad-based strength – with GDP up by a higher than expected 6.1% year on year in Q1 of 2023 and auto sales, PMI [Purchasing Managers’ Indices] surveys and credit growth remaining robust in recent months – and we have raised our forecast for the fiscal year ending in March 2024 by 0.3 percentage points to 6.3%,” Fitch said in its latest Global Economic Outlook.
Meanwhile, the rating agency also raised global GDP growth forecasts for 2023 to 2.4% from 2% projected in March. However Fitch cautioned against the global slowdown. The ratings agency said the Indian economy will be affected by slowing global trade.
“Domestically the full impact of 250 bps (basis points) of the monetary policy tightening is still to be felt. Consumers have also experienced a drop in purchasing power as inflation increased sharply in 2022 and household balance sheets have also been weakened through the pandemic,” the ratings agency added.
In its report, it also highlighted the fact that the centre’s thrust on increased capital expenditure, moderation in commodity prices and robust credit growth will support investment.