Summary:

India Ratings and Research (Ind-Ra) expects India's GDP to grow by 6.6% in FY26, up from 6.4% in FY24. Investments are projected to continue driving growth, as seen in FY22 and FY24. Following a cyclical slump, the economy is expected to recover starting from the December quarter. The COVID-19 aftermath and a significant base effect weighed on GDP, while private sector capex challenges and elections slowed H1 FY25 growth.

Ind-Ra highlighted monetary, fiscal, and external tightening challenges for the economy. While monetary conditions are projected to ease, fiscal and external tightening are expected to persist in FY26. Retail inflation is forecast to decline to 4.4%, down from 4.9% in FY25. Policy rate cuts will depend on the FY26 Union Budget and broader economic conditions. Ind-Ra predicts a merchandise trade deficit of US$ 308 billion in FY26. GDP growth in FY26 may approach India's best decadal performance, although uncertainties such as a trade war could affect these projections.

Source: IBEF

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