Why despite the global slump, Fitch remains optimistic about India's growth

Fitch raises its estimate of India's growth to 7.2% due to strong investments.
However, the ratings agency anticipates a slowdown in global growth.
Global growth will decelerate in 2024 even with expected monetary easing.
Due to the recent significant expansion in investments, Fitch Ratings has changed its growth prediction for India's current financial year from 7% to 7.2%.

The June Global Economic Outlook, which was made public on Tuesday, states that India's economy grew by 7.8% in the last quarter of FY24—beyond Fitch's projections—and by 8.2% overall for the fiscal year.

Falling indirect taxes, net of subsidies, have boosted GDP growth in comparison to gross value-added at basic prices, according to the rating agency. This ratio offers a more accurate picture of the underlying economic momentum, which is presently expanding at a rate of slightly over 7%.

Though more slowly than in previous quarters, Fitch expects investment to expand under Prime Minister Narendra Modi's third term.

Furthermore, because consumer confidence is high, it is anticipated that consumer spending would rebound.

There is a chance that the 'above normal' monsoon projected for June-September would lessen the likelihood of volatile food prices. According to Fitch's forecast, headline inflation in India will average 4.3% in 2025 and 2026 before dropping to 4.5% by the end of 2024.