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Informist, Tuesday, Sept. 23, 2025

 

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--OECD raises India FY26 GDP growth forecast by 40 bps to 6.7%
--OECD cuts India FY27 GDP growth forecast by 20 bps to 6.2%
--OECD cuts India FY26 CPI inflation forecast by 120 bps to 2.9%
--OECD cuts India FY27 CPI inflation forecast by 10 bps to 3.9%
--OECD: Higher US tariff rates to weigh on India's export sector
--OECD: India econ activity seen supported by monetary, fiscal policy easing
--OECD: India economic activity seen supported by GST reforms

 

NEW DELHI - The Organisation for Economic Co-operation and Development has raised its forecast for India's GDP growth in the current financial year ending March by 40 basis points to 6.7%. The Indian economy is expected to be supported by monetary and fiscal policy easing, including the latest changes made to the goods and services tax regime, OECD said Tuesday.

 

For FY27, OECD lowered the growth forecast by 20 bps to 6.2%. India's GDP grew quicker than expected at 7.8% in the June quarter because of a "a steep fall in the growth of the GDP deflator", post which several economists have raised their growth forecasts for the year. GDP had expanded 6.5% in FY25.

 

Fitch Ratings earlier this month raised India's FY26 GDP growth forecast by 40 bps to 6.9%. The Reserve Bank of India in August retained its growth forecast for FY26 at 6.5%, but some economists expect it to increase the projection on Oct. 1, when the interest rate decision of the Monetary Policy Committee is scheduled to be announced.

 

"In India, higher tariff rates will weigh on the export sector, but overall activity is anticipated to be supported by monetary and fiscal policy easing, including the reform to the goods and services tax," OECD said in its economic outlook report for September.

 

The RBI's MPC has lowered interest rates by 100 bps in 2025 so far to support growth while the GST Council has reduced the number of GST slabs to two--5% and 18% along with a special slab of 40% for sin and luxury goods--from four earlier.

 

The GST rate changes are expected to increase consumption and growth, and lower prices of goods. OECD projects India's CPI inflation at 2.9% in FY26, 120 bps lower than its previous forecast and 20 bps below RBI's forecast of 3.1%.

 

CPI inflation has moderated this year because of a sharp decline in food price inflation. CPI inflation was 2.1% in August and is expected to fall below 2% in the coming months because of GST rate rationalisation. OECD sees inflation rising to 3.9% in FY27, 10 bps lower than previously projected.  End

 

Reported by Shubham Rana

Edited by Vandana Hingorani

 

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