Is India’s GDP Set to Grow by 6.5% This Fiscal Year?
Click to start listening
Synopsis
Crisil's recent report reveals India's GDP growth is projected at 6.5% for FY26, bolstered by rising domestic consumption and favorable economic indicators. With CPI inflation expected to average 4%, this outlook reflects a positive trajectory for the Indian economy amidst global uncertainties.
Key Takeaways
- India’s GDP projected to grow by 6.5% this fiscal year.
- Domestic consumption is a major driver of growth.
- Inflation expected to average 4% this fiscal year.
- One more RBI rate cut anticipated.
- Fiscal deficit targeted at 4.4% of GDP.
New Delhi, July 21 (NationPress) A recent report from Crisil has forecasted that India’s gross domestic product (GDP) will see a growth of 6.5 percent during this fiscal year (FY26), buoyed by a rise in domestic consumption and several other positive trends. The Crisil Intelligence’s near-term outlook highlights that global uncertainties stemming from US tariffs pose the most significant risk to India's growth trajectory.
However, the report emphasizes that growth will be bolstered by enhanced domestic consumption, which is anticipated to benefit from an above-normal monsoon season, income tax relief measures, and recent rate cuts by the RBI’s Monetary Policy Committee (MPC).
In the fourth quarter of the previous fiscal year, GDP growth accelerated to 7.4 percent year-on-year, up from 6.4 percent in the prior quarter, contributing to an overall GDP growth of 6.5 percent for FY25.
The Consumer Price Index (CPI) inflation rate fell to 2.1 percent in June, marking the lowest level in 77 months, primarily due to a decline in food inflation.
“Considering the inflation outlook, expectations for a robust monsoon, and predictions of softening global oil and commodity prices, we project CPI inflation to average 4 percent this fiscal, down from 4.6 percent last fiscal,” the report stated.
Furthermore, the report anticipates one additional RBI repo rate cut this fiscal before pausing. The MPC has already reduced the rate by 100 basis points between February and June 2025, and the shift in policy stance from accommodative to neutral in June indicates a strategic front-loading of rate cuts, with a 100 bps CRR cut scheduled to be implemented in four phases from September to November 2025.
Regarding fiscal health, the Union Budget aims to lower the central government’s fiscal deficit to 4.4 percent of GDP this fiscal, down from 4.8 percent last fiscal.
Gross market borrowing is projected to be Rs 14.8 lakh crore this fiscal, reflecting a 5.8 percent year-on-year increase. The government intends to execute 54 percent of the budgeted borrowing in the first half of the fiscal year,” the report elaborated.
As of May, the fiscal deficit was 0.8 percent of this fiscal’s Budget target, significantly lower than the 3.1 percent recorded during the same timeframe last fiscal, attributed to increased revenue receipts and reduced expenditure.
The report also forecasts that the current account deficit (CAD) will average 1.3 percent of GDP this fiscal, compared to 0.6 percent last fiscal.
Point of View
It's crucial to recognize the significance of Crisil's forecast on India's GDP growth. With an expected rise to 6.5% and a manageable inflation rate, these indicators suggest a resilient economy. However, the risks posed by global uncertainties remind us to remain vigilant as we navigate these promising yet challenging economic waters.
NationPress
21/07/2025
Frequently Asked Questions
What is the projected GDP growth for India this fiscal year?
The projected GDP growth for India this fiscal year (FY26) is 6.5% according to Crisil.
What factors are supporting India's GDP growth?
Improving domestic consumption, an above-normal monsoon, and income tax relief are key factors supporting India's GDP growth.
What is the expected average inflation rate for this fiscal?
Crisil predicts an average inflation rate of 4% this fiscal year.
How has the RBI influenced the economic outlook?
The RBI's recent rate cuts and the potential for additional cuts have positively influenced the economic outlook.
What is the expected current account deficit for this fiscal?
The current account deficit is expected to average 1.3% of GDP this fiscal year.
