New Delhi: The Indian economy is seen growing at 7.5 percent in the financial year beginning April compared with this year's estimated growth of 7.0 percent, ratings agency Fitch said in a report on Thursday.
"India appears to be reaching the bottom of the current economic cycle...a breakdown by expenditure shows that domestic demand appears to have stabilized as private consumption rebounded," Fitch said in the report.
In its advanced estimate released last month, the Central Statistics Office has pegged India's GDP growth for the current financial year at 6.9 percent. The budget for 2012-13 had pegged India's GDP growth for the next financial year at 7.6 percent.
The ratings agency said the slowdown in economic activity was taming inflationary pressures, and it expected the Reserve Bank of India to lower the repo rate by a cumulative 100 basis points in the coming financial year.
"Barring any unforeseen shock to oil prices, it seems reasonable to believe that India is unlikely to face a sharp reacceleration in inflation this year," it said. "February's rise in headline WPI was largely a result of unseasonal rain patterns, which led to a surge in food prices, otherwise core inflation pressures are easing."
The central bank left the repo rate unchanged at its mid-quarter monetary policy review, attributing the status quo to high crude oil prices that pose upside risks to inflation.
India's headline inflation rate based on the Wholesale Price Index fell to 6.95 percent in February from a 15-month high of 10.00 percent in September.
The RBI has projected the inflation rate to ease to 7.0 percent by March, while the Budget has assumed an average inflation of 6.4 percent in 2012-13.