CHENNAI: S&P Global has maintained its forecast for India’s economic growth at 6.5% for FY26, citing strong domestic demand, rising investments, and support from tax reforms. The agency expects India to remain one of the fastest-growing major economies, with consumption and capital expenditure continuing to drive momentum.
At the same time, S&P has revised India’s inflation projection downward to 3.2%, largely due to a sharper-than-expected fall in food prices. The decline in food inflation has provided significant relief to households and helped bring headline inflation closer to the Reserve Bank of India’s (RBI) target.
With price pressures easing, S&P believes there is scope for monetary policy adjustments and expects the RBI to deliver a modest 25 basis-point rate cut in FY26. Lower borrowing costs could further support investment and household spending, adding to the growth outlook.
However, risks remain. Volatility in food prices, potential supply chain disruptions, and external pressures such as global trade tensions or rising commodity prices could weigh on the outlook. A global slowdown may also affect exports and capital flows.
Overall, S&P’s assessment reflects confidence in India’s domestic growth drivers, while underlining the importance of maintaining fiscal discipline and carefully managing risks from both domestic and external fronts.