S&P Global Ratings has forecast India’s Gross Domestic Product (GDP) growth at 6.5% for FY26, citing strong domestic consumption, recent tax cuts, and monetary policy easing as key drivers. The economy grew 7.8% in Q1 FY26, marking the fastest expansion in five quarters, and S&P expects growth momentum to remain resilient despite the challenges posed by higher US tariffs.
The rating agency noted that a potential trade agreement between India and the United States would help reduce uncertainty for exporters, particularly in labour-intensive sectors currently impacted by tariff pressures. The Reserve Bank of India (RBI), meanwhile, has projected GDP growth for FY26 at 6.8%, higher than last year’s 6.5%.
A set of policy measures has strengthened the consumption outlook. The government’s revision of income tax rebates to ₹12 lakh has infused ₹1 lakh crore of relief for middle-income households. Complementing this, the RBI has lowered the policy repo rate by 50 basis points to 5.5%, marking the lowest rate in three years. In addition, the reduction of Goods and Services Tax (GST) rates on around 375 items since September 22 has made a wide range of mass-market goods more affordable.
While export-oriented manufacturing continues to feel the strain of US tariff hikes, S&P highlighted early signals of progress in tariff roll-back negotiations. Overall, the agency described India’s growth outlook as “balanced,” supported by strong domestic demand, structural reforms, and a policy environment geared towards consumption-led expansion.
Disclaimer:
This article is intended solely for educational and informational purposes. The securities or companies mentioned are provided as examples and should not be considered as recommendations. Nothing contained herein constitutes personal financial advice or investment recommendations. Readers are advised to conduct their own research and consult a qualified financial advisor before making any investment decisions.
Investments in securities markets are subject to market risks. Please read all related documents carefully before investing.