S&P Global Ratings on Monday kept its projection for India’s economic expansion at 6.5 per cent in the current fiscal year and forecast 6.7 per cent for the following year, saying recent tax cuts and monetary policy easing are set to support consumption-led growth, PTI reported.
The agency said these factors would play a central role in sustaining demand at a time when households benefit from both lower taxes and cheaper borrowing.
“We anticipate that India’s GDP will grow by 6.5 per cent in fiscal year 2026 (ending March 2026) and 6.7 per cent in fiscal 2027, with risks evenly balanced. Domestic growth remains robust, driven by strong consumption, despite the impact of US tariffs,” S&P said in its Economic Outlook Asia-Pacific report.
India’s real gross domestic product grew 7.8 per cent in the April to June quarter of the current fiscal year, which marked the fastest pace in five quarters. The official estimates for the July to September quarter are scheduled for release on November 28, and will offer a clearer sense of momentum heading into the second half of the year.
A poll by ET of 12 economists shows expectations that India’s economic growth likely quickened to 7.3 per cent in the second quarter, supported by steady rural demand, higher government expenditure and early export shipments. Estimates in the poll ranged from 6.9 per cent to 7.7 per cent, with a median of 7.3 per cent. The National Statistical Office will release the official numbers on November 28, while the RBI has pegged growth for the September quarter at 7 per cent.
The Reserve Bank of India has projected growth of 6.8 per cent in the current fiscal, which is an improvement over last year’s expansion of 6.5 per cent.
S&P said that if India can secure a trade agreement with the United States, it would reduce uncertainty and lift confidence, which would in turn help labour-intensive sectors that have been affected by shifts in global demand.
“Lowered goods and service tax (GST) rates will support middle-class consumption and complement income tax cuts and interest rate reductions introduced this year. These changes are likely to make consumption a greater driver of growth compared with investment, in this fiscal year, and the next,” S&P added. The Government in the Budget for 2025-26 raised the income tax rebate threshold to ₹12 lakh from ₹7 lakh, offering relief of ₹1 lakh crore to the middle class. The RBI in June cut its key policy rate by 50 basis points to 5.5 per cent, the lowest in three years. GST rates on about 375 items were reduced from September 22, making mass consumption goods cheaper.
S&P said the higher effective US tariff on India is weighing on export-oriented manufacturing. However, there are signs the US may bring down tariffs on Indian goods. “The US’s new approach to trade policy is causing governments and firms to spend time and money on negotiating for exemptions, consequently diverting attention from efforts to raise productivity,” S&P added.
Source Name : Economic Times