Moody’s Ups India Growth Forecast; Fitch Maintains Sovereign Rating

Moody’s has revised India’s GDP growth forecast for this year to 7.2%, up from the previous estimate of 6.8%, citing a strong recovery across various sectors and improving rural demand. The agency also raised its 2025 growth projection to 6.6% from 6.4%.

Moody’s highlighted that India’s economic performance is currently strong, with solid growth paired with moderating inflation. The agency noted that India’s young population, with a median age of 28 and a large working-age demographic, is a significant factor in its growth potential. Improvements in rural demand, driven by favorable agricultural conditions and above-normal monsoon rains, are also boosting the outlook.

Additionally, Moody’s anticipates that the investment cycle will gain momentum, supported by rising business confidence and ongoing government infrastructure projects. While manufacturing has had limited progress recently, improvements in the business environment and global trends are expected to enhance its prospects.

In a separate report, Fitch affirmed India’s sovereign credit rating of ‘BBB-‘, supported by the country’s robust growth outlook and strong external financial position. Fitch noted that while election results indicate policy stability, coalition politics might limit the government’s capacity to implement major reforms.

The agency highlighted that India is likely to remain one of the fastest-growing major economies, with a GDP growth forecast of 7.2% for the current fiscal year and 6.5% for FY26. Fitch also pointed out that public infrastructure investment is driving growth and improving spending quality, while private investment in real estate remains strong. However, Fitch warned that any significant setbacks in fiscal consolidation or economic shocks could lead to a potential downgrade.