More Stories

Informist, Tuesday, Sept. 23, 2025

 

NEW DELHI – S&P Global Ratings Tuesday left its forecast on India's GDP growth for 2025-26 (Apr-Mar) unchanged at 6.5% with strong domestic demand, lower taxes, and higher government investment expected to support growth. The rating agency projects India's GDP to grow at 6.7%, 7.0%, and 6.8% over the next three financial years, respectively. 

"We expect domestic demand to remain strong, supported by a largely benign monsoon season, cuts in the income and the goods and services tax, and accelerating government investment," S&P said in the "Economic Outlook Asia-Pacific Q4 2025" report. While investment has been particularly buoyant in India, it stems mainly from government investment, as private capital expenditure remains sluggish, S&P said. 

 

To support growth, the government announced income tax breaks in the February Budget, and the GST Council approved a two-slab GST regime this month, which reduced the tax burden for households on numerous items. The GST rate changes are expected to offset the impact on GDP growth of the 50% tariff imposed by the US on Indian goods.

 

At 6.5%, S&P's growth forecast for FY26 is in line with the Reserve Bank of India's projection. In the first quarter of FY26, India's GDP grew at a five-quarter high of 7.8%.  Many have raised their growth forecast after the faster-than-expected GDP growth in the June quarter. On Tuesday, the Organisation for Economic Co-operation and Development raised its forecast for India's FY26 GDP growth by 40 basis points to 6.7%, while Fitch Ratings raised its growth forecast by 40 bps to 6.9?rlier this month.

 

S&P expects inflation in India to be 3.2% during FY26, following a sharper-than-expected decline in food inflation. CPI inflation was 2.1% in August and is expected to fall below 2% in the coming months because of GST rate rationalisation.

 

"This leaves room for further monetary policy adjustments and we anticipate a 25 bps rate cut by the Reserve Bank of India this fiscal year," the rating agency said. The RBI Monetary Policy Committee is scheduled to meet next week to review the monetary policy. The committee, which lowered the policy repo rate by 100 bps between February and June, has left the rate unchanged at 5.50% in August. Economists expect the MPC to leave interest rates unchanged in the October meeting, according to an Informist poll.  End

 

Reported by Shubham Rana

Edited by Saji George Titus

 

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.