India’s development pace maintains
India’s economy has started the new financial year 2026 in a strong manner. International rating agency Fitch Ratings has now improved the country’s economic growth rate. Earlier, where growth was expected to be 6.5%, now it has been increased to 6.9%.
This change has been made after the latest data that India’s GDP recorded a faster of 7.8% on an annual basis in the quarter of April to June. In the last quarter, this growth was 7.4%, that is, there has been further improvement. Fitch says that the strength of domestic demand behind this edge is a big reason for the strengthening of the domestic demand and the improvement of financial situation.
Tremendous boom in the service sector
During the quarter of April to June 2025, the service sector played a big role in advancing the economy. During this period, a growth of 9.3% was observed in the field of services, which was 6.8% last time.
Not only the service sector, private and public consumption also saw a significant increase. Private consumption recorded an increase of 7%, indicating stability and strength in demand. This has a direct impact on production, employment and business activities.
Trade tension became an interruption of investment path
While the situation is positive on the domestic front, some problems are also emerging internationally. FITCH has warned that business tension between the US and India can affect India’s economy.
In August, the US has imposed 25% additional tariffs on some products imported from India. Although FITCH hopes that a solution will be found through dialogue between the two countries, but by then this situation can negatively impact the perception of investors.
GST reforms are getting positive signs
FITCH report also emphasized that consumers can increase spending, which have been effective since September, which have been effective since September. Due to this, growth is likely to get additional strength in FY 2026.
Meanwhile, the Composite PMI index released in August has reached the highest level of 17 years. Apart from this, industrial production is also at the top of four months. Experts estimate that GST deduction may give an additional increase of at least 10 basis points to growth.
Growth may slow down slightly in FY 2027
The current figures may be encouraging, but Fitch says that the pace of development may be slightly reduced in the coming time. Especially in the second half of FY 2026, there may be some lethargy in growth. The agency has estimated that in the financial year 2027, the country’s economic growth rate may be reduced to 6.3 percent. After this, it is expected to come down in FY 2028 and stay around 6.2 percent.
However, Fitch’s report also clearly stated that the real strength of India’s economy will continue to be domestic demand even further. That is, the power to shop and spend people inside the country will remain a big support for growth in the coming years.