New Delhi
Fitch Ratings expects India to be among the world’s fastest-growing countries, with resilient GDP growth of 6.5 per cent in 2024-25. For the current financial year 2023-24, it pegs GDP growth at 6.9 per cent.
Demand will remain strong for cement, electricity and petroleum products, with high-frequency data in 2023 sustained at well above pre-Covid-19 pandemic levels. India’s rising infrastructure spending will also boost steel demand. Car sales will continue to rise, despite our expectation of moderation after robust growth in 2023, Fitch said in a report on Friday. India is currently the world’s fifth-largest economy, following the US, China, Germany, and Japan. By 2030, India’s GDP is projected to exceed Japan’s, making India the second-largest economy in the Asia-Pacific region.
India’s robust economic growth will boost demand at corporates, despite weakness from slowing growth in key overseas markets, said the rating agency.
This, and easing input cost pressure, should boost profits in the financial year ending March 2025 by 290 basis points above 2022-23 levels, helping corporates maintain adequate rating headroom, despite higher capital expenditure.
Speaking about India’s IT sector, a big contributor to GDP, the rating said slowing demand in the US and eurozone is likely to moderate sales growth for IT services, but a corresponding easing of employee attrition and wage pressure should underpin higher profitability. Rising demand in the economy will help maintain industry balance in the cement and steel sectors, despite a faster pace of new capacity additions, the rating agency added.
