India’s GDP Growth Projected At 6.6 Per Cent In FY26, Driven by Investments: Ind-Ra

India Ratings and Research (Ind-Ra) has revised its projection for the Indian economy, forecasting a growth rate of 6.6 per cent for Financial Year (FY)26, up from 6.4 per cent in the current fiscal year. The agency attributes investments as the key catalyst for growth in FY26, similar to the performance seen in FY22 and FY24.

The Indian economy has experienced a cyclical slowdown in recent quarters, which Ind-Ra anticipates will reverse starting in the December quarter. The GDP growth in FY24 was significantly affected by the lingering aftereffects of the Covid-19 pandemic, along with base effects that influenced quarterly growth figures.

 The growth rate for the June quarter of FY25 was impacted by a combination of a strong base effect and the general elections held in May 2024, while the July-September period saw the continued impact of weak private sector capital expenditure.

Ind-Ra notes that the Indian economy is currently navigating through tightening conditions in monetary, fiscal, and external factors. Although the agency expects monetary conditions to ease, fiscal and external tightening pressures are likely to persist through FY26.

Devendra Kumar Pant, Chief Economist and Head of Public Finance at Ind-Ra, emphasized that despite these challenges, the FY26 GDP growth is expected to match the best decadal growth India has seen between FY11 and FY20.

However, the outlook for both growth and inflation remains subject to external factors, such as potential tariff wars or capital outflows, particularly if the US dollar continues to appreciate.

Ind-Ra has revised its retail inflation forecast for FY26 to 4.4 per cent, a decrease from its FY25 estimate of 4.9 per cent. The timing of any rate cuts by the Reserve Bank of India will depend on how upcoming data, including the FY26 Union Budget and inflation trends, align with the RBI’s flexible inflation targeting framework.

The merchandise trade account is projected to remain in deficit, reaching $308 billion in FY26, compared to $277.4 billion in FY25 and $244.9 billion in FY24.

Also Read: Formal Job Creation Under ESIC Rises 3 Per Cent In October, Shows Labour Ministry Data