India’s GDP growth is expected to remain stable at 6.5% for the fiscal year 2026, according to a report from S&P Global released on Tuesday. This forecast is bolstered by strong domestic demand, the rationalization of Goods and Services Tax (GST) rates, and income tax reforms. The report highlights that domestic demand is likely to stay robust, aided by a favorable monsoon season, tax cuts, and increased government investment. The GDP growth rate for the April-June 2025 quarter was also revised upwards to 7.8%, surpassing expectations. S&P Global has adjusted its inflation prediction for this fiscal year to 3.2%, following an unexpected decline in food inflation, which allows for potential adjustments in monetary policy.
The Reserve Bank of India (RBI) is anticipated to implement a 25 basis points rate cut within this fiscal year. In the Asia-Pacific region, India has seen significant investment, primarily driven by government spending, while domestic demand continues to be strong, particularly in emerging markets. In contrast, China’s exports have faced challenges, especially to the US, where shipments decreased by 33% year-on-year in August, although exports to other regions, particularly ASEAN, have shown strong growth. The report warns of a potential slowdown in exports due to increased US tariffs and a cooling global economy.