Growth Outlook
S&P ups India GDP growth forecast by 20 bps to 6.5% for FY26, 6.7% for FY27
This story was originally published at 14:25 IST on 24 June 2025
Register to read our real-time news.Informist, Tuesday, Jun. 24, 2025
NEW DELHI – S&P Global Ratings raised its GDP growth forecast for India by 20 basis points for both 2025-26 (Apr-Mar) and FY27 to 6.5% and 6.7%, respectively. This reverses a cut in the outlook that the ratings agency had given in May due to the impact of US trade policy.
"In India, growth picked up after a soft patch," S&P said Monday in its economic outlook for Asia-Pacific for Jul-Sept. "Domestic demand resilience is particularly relevant in limiting the economic slowdown in economies less exposed to goods exports such as India and the Philippines...".
The forecast assumes a normal monsoon, lower crude prices, income tax cuts from the FY26 Budget and monetary easing. For FY28, S&P left its forecast unchanged at 7.0% and for FY29, forecast India's GDP to grow 6.8%.
The ratings agency sees the Reserve Bank of India's Monetary Policy Committee cutting the policy repo rate by another 25 bps to 5.25% by March. India's rate-setting panel has already cut the policy rate by 100 bps between February and June, though it moved to a 'neutral' policy stance from 'accommodative' at its latest meeting earlier this month. Monetary policy easing began after the government, in the Budget for FY26, proposed to fully exempt tax on income up to INR 1.2 million.
S&P sees the policy repo rate unchanged at 5.25?tween March 2026 and March 2029, as CPI inflation may remain at or above the RBI's 4% medium-term target for the next few years. The agency's inflation forecast for FY26 is 4.0%, higher than the RBI's 3.7%, before rising to 4.4% in FY27 and 4.5% in FY28 and FY29, S&P said.
The ratings agency noted the sequential rise in core inflation in India in recent months, but said falling food inflation helped bring down the headline. India's headline CPI inflation fell to a 75-month low of 2.82% in May, the latest reading said, while core inflation climbed to a 19-month high of 4.2%. The rise was largely attributed by economists and MPC members to the high and rising prices of gold.
"Recent falls in global energy prices and currency appreciation against the US dollar will dampen price increases in the months ahead, even taking into account the recent rise in the oil price amid Middle East turmoil," the report said. This will allow most economies in the region to ease monetary policy, S&P said.
On the exchange rate front, the ratings agency sees the rupee falling slightly to 87.5 a dollar by March, followed by an orderly depreciation in the next few years. The Indian unit was at 86.09 a dollar at 1410 IST. India's currency is seen at 88.5 a dollar by the end of FY27, 89 a dollar at FY28-end and 90 a dollar at FY29-end. The Indian unit has been volatile this month, trading in a range of 85.30-86.89 a dollar. End
US$1 = INR 86.09
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Reported by Aaryan Khanna
Edited by Akul Nishant Akhoury
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2025. All rights reserved.
To read more please subscribe
Share this Story:
