Summary:

Moody’s forecasts India to lead the G20 nations both advanced and emerging in Gross Domestic Product (GDP) growth, projecting a 6.5% expansion in FY26. This strong economic trajectory is fueled by key factors such as government-driven tax reforms, easing monetary policies and robust domestic consumption. Inflation is expected to stabilize, averaging 4.5% in FY26, down from 4.9% in FY25. To further stimulate growth, the Reserve Bank of India (RBI) reduced interest rates by 25 basis points to 6.25% in February, with additional cuts anticipated in April 2025. In a move to provide financial relief, the government has raised the income tax rebate threshold from Rs. 7 lakh (US$ 8,175.06) to Rs. 12 lakh (US$ 14,014.38), offering middle-class taxpayers a benefit amounting to Rs. 1,00,000 crore (US$ 11.68 billion).

India’s economic environment remains favorable for global investment, supported by its expansive domestic market, well-established capital markets, credible policy framework and strong foreign exchange reserves. The nation’s external vulnerability indicator stands at a relatively low 61%, with a significant share of external debt denominated in domestic currency, thereby minimizing exposure to global financial instability. In contrast, China’s economy is largely driven by exports and technological advancements but struggles with weak domestic consumption. Meanwhile, India and Brazil maintain a stronger position compared to Argentina and Colombia, which face higher risks due to their reliance on foreign currency-denominated debt. Moody’s also warns that shifts in U.S. policies and volatility in global trade could pose challenges for emerging economies.

Source: IBEF

Disclaimer:

The information on this website comes from the India Brand Equity Foundation (IBEF), a reliable source for thorough insights into numerous areas of the Indian economy. While we aim to offer accurate and up-to-date information, the views, opinions and analyses stated herein are solely those of the authors and contributors and do not necessarily represent IBEF's official stance or position. Readers should check information from credible sources and use their own discretion when relying on content provided on this site. We assume no responsibility or liability for the supplied content, including its accuracy, completeness and usefulness.