Will India's GDP Growth Steady at 6.5% and Another RBI Rate Cut Occur This Fiscal?
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Synopsis
A Crisil report indicates India's GDP growth is projected to stabilize at 6.5% for FY26, despite external challenges. With potential RBI rate cuts, consumption could rise, but export growth may hinder overall progress. What does this mean for the Indian economy?
Key Takeaways
- India's GDP growth is projected at 6.5%.
- External factors pose risks to growth.
- RBI rate cuts may boost consumption.
- Inflation remains below target.
- Bank credit growth shows positive trends.
New Delhi, Sep 12 (NationPress) A recent report by Crisil forecasts that India’s gross domestic product (GDP) growth will maintain a stable rate of 6.5 percent for the fiscal year 2026, although it faces some downside risks due to external factors.
Current export growth is likely to hinder GDP expansion, particularly because the US has imposed 50 percent tariffs on Indian goods. Nevertheless, consumer spending is expected to rise, fueled by rate cuts, favorable rainfall, moderate inflation, and tax relief, as highlighted in the report.
The anticipated repo rate cuts and a 100-bps reduction in the cash reserve ratio, scheduled between September and December, may alleviate some financial pressures this fiscal year.
“However, capital flow volatility due to global uncertainties may keep the rupee under pressure in the near term,” the report added.
Crisil anticipates that the RBI Monetary Policy Committee (MPC) will implement another cut in policy rates during this fiscal year, driven by expectations of moderate inflation and risks to growth.
“Inflation has consistently remained below the RBI’s target of 4 percent for the past six months (February-July). A robust agricultural output is likely to help keep food inflation low. By August 29, kharif sowing had increased by a healthy 2.9 percent year-on-year,” the report stated.
Nonetheless, certain crop yields may face challenges due to excessive rainfall. Declining commodity prices are expected to contribute to lower non-food inflation. Additionally, reduced GST rates are likely to exert further downward pressure on inflation this fiscal year, the report indicated.
Bank credit growth experienced an increase, reaching 10 percent year-on-year in August, up from 9.8 percent in July and an average of 9.6 percent in the quarter ended June.
Sector-specific data until July shows a positive trend in credit for services (10.6 percent in July compared to 9 percent in June), agriculture (7.3 percent vs. 6.8 percent), and industry (6 percent vs. 5.5 percent).
In contrast, personal loan growth remained relatively stable at 11.9 percent, compared to 12.1 percent.
The one-year marginal cost of funds-based lending rate (MCLR), a benchmark for various bank lending rates, decreased by 15 bps to 8.6 percent. This adjustment reflects the delayed response to the 100-bps rate cut by the RBI’s MPC between February and June 2025.
Point of View
The findings of the Crisil report underscore the resilience of India's economy. While external pressures and tariff challenges pose risks, the anticipated RBI rate cuts may stimulate growth. It’s crucial to monitor these developments for their potential impact on consumers and businesses across the nation.
NationPress
12/09/2025
Frequently Asked Questions
What is the projected GDP growth for India in FY26?
The projected GDP growth for India in FY26 is 6.5 percent, according to a Crisil report.
What factors could affect India's GDP growth?
Factors such as export growth hindered by US tariffs and external economic conditions could negatively impact GDP growth.
Will there be any RBI rate cuts this fiscal year?
Yes, the Crisil report suggests that the RBI Monetary Policy Committee is likely to implement another rate cut this fiscal year.
How has inflation behaved recently in India?
Inflation has been below the RBI's target of 4 percent for the last six months, thanks to healthy agricultural productivity.
What is the current trend in bank credit growth?
As of August, bank credit growth has risen to 10 percent year-on-year, showing positive trends in various sectors.
