Synopsis
On April 14, Crisil projected a 6.5% GDP growth for India in fiscal 2026 amid concerns over US tariffs, highlighting potential risks and supportive factors such as monetary easing and improved consumer confidence.Key Takeaways
- Projected GDP Growth: 6.5% for India in FY26.
- Risks: US tariff hikes pose a significant concern.
- Supportive Factors: Interest rate cuts and tax relief expected to boost consumption.
- Improving Demand: Indicators show strengthening demand in Q4 FY25.
- Industry Performance: IIP growth reflects positive trends in manufacturing.
New Delhi, April 14 (NationPress) Despite the persistent threat posed by US tariff increases, the global credit rating agency Crisil has forecasted a 6.5% GDP growth for India in the fiscal year 2026, with potential risks leaning towards the downside.
Crisil anticipates that the RBI’s monetary easing will help mitigate some of the external challenges.
“Interest rate reductions, income tax relief, and lower inflation are projected to bolster consumption this fiscal year, while a predicted normal monsoon will benefit agricultural earnings,” the report states.
Furthermore, an expected drop in global crude oil prices due to a possible worldwide slowdown is likely to further assist domestic growth, the report adds.
However, the US tariff hikes pose a significant threat to Crisil’s GDP growth estimates for fiscal 2026, as the uncertainty surrounding the length and frequent modifications of tariffs could deter investments.
In FY25, an uptick in capital, infrastructure, and construction goods output in the latter half signals a gradual recovery in construction and capital expenditure activities.
Additionally, various high-frequency indicators suggest that growth expectations are improving as we approach the fourth quarter.
The latest RBI 'Quarterly Industrial Outlook’ survey indicates a sequential strengthening of demand in the fourth quarter (Q4 FY25).
“The recent RBI Consumer Confidence Survey reveals a rise in confidence in March across both rural and urban areas. These factors support the recovery in domestic demand. A healthy rabi output and lower inflation in the fourth quarter are also promising for consumption demand,” the report highlighted.
Industrial growth, represented by the Index of Industrial Production (IIP), decreased to 2.9% in February from 5.2% in January (revised up from 5.0%), driven by a slowdown in the mining and manufacturing sectors, although electricity production saw an increase.
“On average, IIP growth was at 4.0% in the fourth quarter as of February, aligning closely with the 4.1% recorded in the December quarter,” stated Crisil.
With data now available for eleven months of FY25, the underlying momentum within sub-sectors of IIP can be noted. The IIP manufacturing sector performed better on average in the latter half of fiscal 2025, boosting growth in areas such as petroleum products, machinery, and textiles.
