Fitch increases India’s GDP growth estimate to 6.9%: 7.8% growth in June quarter is the reason, RBI may increase interest rate by 0.25%

Credit rating agency Fitch has increased India’s GDP growth forecast for the current financial year 2026-27 from 6.4% to 6.9%. According to Fitch, the country’s economic growth in the June quarter was 7.8%, which shows India’s strong economic condition.

However, the rating agency also estimates that considering the impact of inflation and less rainfall in the coming months, RBI may increase interest rates by 0.25% in the upcoming October monetary policy meeting.

Earlier, global rating agency Moody’s had increased India’s GDP growth estimate for the financial year 2026-27 from 6% to 7%.

Boosted by 7.8% growth in June quarter

According to Fitch Ratings, the Indian economy has shown considerable strength in the first half of 2026 despite tensions between the US and Iran and trade challenges. The GDP growth rate of 7.8% in the June quarter is proof of this. However, the agency says that the pace of economic activity may slow down slightly in the remaining quarters of the current financial year.

RBI may increase interest rate by 0.25% in October

Fitch has indicated in its report that in view of rising prices and supply chain problems, RBI may increase policy rates by 0.25% to 5.5% in the October 2026 meeting. According to the rating agency, this increase in interest rates will not stop here. Interest rates may rise to 5.75% by the beginning of 2027, after which they are likely to fall back to 5.5% in 2028.

Increase in private investment and credit growth

Even though there are some challenges facing the economy, the investment situation from the private sector looks much better. Fitch expects private investment to increase by more than 10% this year. Apart from this, non-food credit growth in July was also recorded at 19% on an annual basis, which shows that the demand for loans for business and infrastructure is increasing rapidly.

3 main reasons for slowing down of economy

Fitch has given three main reasons behind the growth rate slowing down in the coming quarters:

S&P and Moody’s also estimated growth of 7%

Before Fitch, other global rating agencies have also expressed confidence in India’s economy. On Wednesday, S&P Global Ratings has estimated India’s growth rate to be 7% for the financial year 2026-27. Last week, rating agency Moody’s had also estimated India’s GDP growth to be 7% for the current financial year. It is noteworthy that in the last financial year (2025-26), India’s GDP growth was recorded at 7.8%.

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