Fitch Ratings, a leading rating agency, anticipates India to emerge as one of the fastest-growing nations globally in the next fiscal year, projecting a resilient GDP growth of 6.5% in 2024-25. In the ongoing fiscal year, Fitch estimates India’s GDP to grow at a noteworthy rate of 6.9%. The rating agency highlights that demand is expected to remain robust for essential sectors such as cement, electricity, and petroleum products. Fitch notes that high-frequency data in 2023 indicates sustained levels well above those observed before the Covid-19 pandemic.
Infrastructure Boom Boosting Steel Demand
India’s escalating infrastructure spending is poised to drive demand for steel, according to Fitch. The report also suggests a continued rise in car sales, even with an expected moderation after robust growth in 2023. Currently, the world’s fifth-largest economy, India is projected to surpass Japan’s GDP by 2030, securing the second-largest economy status in the Asia-Pacific region.
Corporate Profits Expected to Soar
Fitch predicts that India’s robust economic growth will generate increased demand for corporations, despite challenges from slowing growth in key overseas markets. The easing of input cost pressure is foreseen to contribute to a significant boost in profits by 290 basis points above the levels observed in 2022-23.
IT Sector Resilience Amid Global Challenges
Fitch addresses the performance of India’s IT sector, a major GDP contributor, stating that while slowing demand in the US and the eurozone might moderate sales growth for IT services, a corresponding easing of employee attrition and wage pressure is expected to support higher profitability.
Industry Balance Amid Rising Demand
Rising demand in the Indian economy is anticipated to maintain balance in the cement and steel sectors, even with an accelerated pace of new capacity additions, as outlined by Fitch. Fitch expresses confidence in India’s structural demand visibility, government-led supply-side reforms, and healthier corporate and bank balance sheets. This optimism leads the agency to believe in a further increase in capital expenditure across most sectors following an uptick in FY23.
Consensus Amongst Global Institutions
Global financial institutions share the positive sentiment for India’s growth. The International Monetary Fund (IMF), Goldman Sachs Research, S&P, and the RBI have all projected robust growth rates for the country in the coming years, reinforcing the optimistic outlook for India’s economic trajectory.
