India GDP growth forecast: S&P Global Ratings has maintained a positive outlook on India’s economic trajectory, projecting 6.5% GDP growth in the current fiscal year and a further rise to 6.7% in FY27, supported by strong consumption, fiscal stimulus and monetary policy easing. The agency shared its assessment in the Economic Outlook Asia-Pacific report released on Monday.
India’s growth momentum remains resilient despite global uncertainty, elevated US tariffs and weakening external demand. The economy expanded 7.8% in the April–June quarter—the fastest pace in five quarters—reflecting robust domestic activity. Official GDP data for the July–September (Q2 FY26) quarter will be released on November 28, with the RBI estimating 7% growth for the period.
S&P: Domestic Demand Will Drive Growth
Highlighting the strength of India’s internal engines of expansion, S&P said, “We anticipate that India’s GDP will grow by 6.5% in fiscal year 2026 (ending March 2026) and 6.7% in fiscal 2027, with risks evenly balanced.” The agency added that domestic consumption “remains robust” despite external headwinds including US trade measures.
S&P believes policy interventions have played a crucial role in cushioning growth. Recent tax reforms, including the substantial increase in income-tax rebate limits, and aggressive monetary easing by the Reserve Bank of India are expected to support household spending in the coming quarters.
India’s GDP growth is forecast to remain steady at 6.5% in FY26 before improving modestly to 6.7% in 2026–27, according to the agency’s projections.
Tax Cuts, Lower Interest Rates and GST Rationalisation Boost Outlook
A series of demand-boosting measures implemented this year will continue to support the growth trajectory. The Union Budget 2025–26 raised the income-tax rebate threshold to ₹12 lakh (from ₹7 lakh), delivering ₹1 lakh crore in annual relief to middle-class taxpayers.
Meanwhile, the RBI has delivered three back-to-back rate cuts in 2025, amounting to 100 basis points, reducing the repo rate from 6.50% to 5.50%. The easing cycle aims to bolster growth amid low inflation and global volatility.
Additionally, GST rates on around 380 mass-consumption items were slashed from September 22, sharply reducing prices of everyday goods and providing a notable boost to consumption during the festive months.
S&P said a potential trade agreement between India and the US would further reduce uncertainty and support exports in labour-intensive industries. The agency noted, “The US’s new approach to trade policy is causing governments and firms to spend time and money on negotiating for exemptions, consequently diverting attention from efforts to raise productivity.”
SBI Sees Q2 FY26 Growth Near 7.5%
State Bank of India’s latest economic update earlier this month signalled that India may deliver another quarter of strong performance. SBI Research expects around 7.5% GDP growth in Q2 FY26, supported by a revival in investment activity, improving rural demand and the consumption lift triggered by GST rationalisation.
SBI’s nowcast model showed that 83% of high-frequency indicators pointed to strong demand in Q2, significantly higher than 70% in Q1, with broad-based gains across agriculture, industry and services. The research team noted that festive spending in September–October 2025 surged, “showcasing triumph of hope over hype.”
The Reserve Bank of India, meanwhile, expects 6.8% GDP growth for the full fiscal year, higher than 6.5% last year, signalling stable momentum despite global uncertainty.