India’s Economy to Grow at 6.5% in FY26, Says S&P Global Ratings
India’s economy is projected to grow at 6.5% in FY26, driven by robust domestic demand, a normal monsoon, and expected monetary easing, according to a report released by S&P Global Ratings on Tuesday. The report, covering Asia-Pacific economies, highlights India’s domestic demand resilience as a key factor in countering global economic headwinds.
S&P’s forecast is based on assumptions including lower crude oil prices, income-tax reliefs, and a supportive monetary policy. Easing inflation pressures have also played a role, with WPI-based inflation falling to a 14-month low of 0.39% in May, and CPI-based retail inflation dropping to 2.82%—its lowest since February 2019. Food inflation declined for the seventh consecutive month to 0.99%, backed by strong agricultural output.
In response to disinflation, the Reserve Bank of India (RBI) cut the repo rate by 50 basis points to 5.5% and revised its inflation outlook for FY26 from 4% to 3.7%.
S&P noted strong domestic demand across the Asia-Pacific, with India showing renewed economic momentum. Meanwhile, China is expected to grow at 4.3% in 2025, facing continued export and import challenges. The region remains under pressure from uncertain U.S. trade policies and weak Chinese demand.
