India’s GDP Projected to Grow 6.5% in FY26 Amid Expected Rate Cuts

New Delhi: India’s economy is poised for steady growth, with GDP projected to expand by 6.5% in the fiscal year 2025-26, according to a recent report by S&P Global Ratings. The forecast highlights the resilience of India’s domestic demand despite global economic uncertainties, including rising US tariffs and a pushback against globalization.

The report attributes the optimistic growth outlook to several factors, including cooling food inflation, tax benefits announced in the Union Budget 2025-26, and lower borrowing costs. The Reserve Bank of India (RBI) is expected to implement further rate cuts, ranging between 75 and 100 basis points, during the current monetary cycle. These measures are anticipated to bring inflation closer to the central bank’s target of 4% by the end of FY26.

S&P’s projections assume a normal monsoon season and stable commodity prices, particularly crude oil. The report also emphasizes the importance of discretionary consumption, supported by reduced borrowing costs and increased disposable income due to tax reforms.

While the global economic environment remains challenging, India’s relatively low reliance on external demand positions it as a resilient player in the Asia-Pacific region. The report underscores the robustness of India’s domestic demand momentum, which is expected to drive growth despite external pressures.

This forecast aligns with other economic analyses, including those by Fitch Ratings and Moody’s, which also project India’s GDP growth at 6.5% for FY26. The RBI’s recent monetary policy review, which included a 25 basis point reduction in the repo rate to 6.25%, further supports the outlook for sustained economic expansion.

As India continues to navigate global economic headwinds, the combination of prudent fiscal policies and robust domestic demand is expected to keep the economy on a steady growth trajectory.

Stay tuned for more updates on India’s economic developments.