Fitch Revises India's FY26 GDP Forecast To 6.9% From 6.5%

In a major confidence boost for India, global credit rating agency Fitch Ratings has upgraded India's GDP growth rate forecast to 6.9% for financial year 2025-26, reported CNBC TV-18 on Wednesday. Earlier, rating agency had fixed India's FY26 GDP forecast at 6.5%.

The revision has come days after India released its Q1FY26 GDP data. India's GDP grew at 7.8% rate in the first quarter of FY26, according to Ministry of Statistics, Programme and Implementation.

The Ministry of Statistics and Programme Implementation earlier reported that India's Real GDP is projected to grow by 7.8% in the first quarter of the fiscal year 2025-26, compared to a 6.5% growth rate in the same period of the previous fiscal year. This increase is largely attributed to robust performance in the services sector.

Real GDP for Q1 of FY 2025-26 is estimated at ₹47.89 lakh crore, up from ₹44.42 lakh crore in Q1 of FY 2024-25. Nominal GDP for the same period stands at ₹86.05 lakh crore, showing an 8.8% growth from ₹79.08 lakh crore in the previous year.

Sectoral Growth Insights

The tertiary sector, which includes trade, hotels, transport, and communication, recorded a significant growth rate of 9.3% at constant prices in Q1 of FY 2025-26, improving from a 6.8% growth rate in Q1 of FY 2024-25.

The agriculture and allied sectors saw a real GVA growth rate of 3.7%, a notable rise from the previous year's 1.5%. Meanwhile, manufacturing and construction sectors both achieved growth rates above 7.5% at constant prices.

However, mining and quarrying experienced a decline with a -3.1% growth rate, while electricity, gas, water supply, and other utility services showed only a modest increase of 0.5% during this quarter.

Expenditure Components

Government Final Consumption Expenditure (GFCE) rebounded with a nominal growth rate of 9.7% in Q1 of FY 2025-26 compared to just 4.0% in the previous year's corresponding period.

Real Private Final Consumption Expenditure (PFCE) grew by 7.0%, slightly lower than the previous year's growth rate of 8.3%. Gross Fixed Capital Formation (GFCF) recorded a steady increase with a growth rate of 7.8%, up from last year's 6.7%.