S&P Global Ratings Upgrades India's FY26 GDP Growth Forecast to 6.5%
S&P Global Ratings has upwardly revised India's GDP growth forecast for the fiscal year 2026 to 6.5%. This positive outlook is attributed to an anticipated normal monsoon, lower crude oil prices, income-tax concessions, and monetary easing. The agency highlighted India's domestic demand resilience while noting potential risks from Middle East turbulence affecting global oil markets and trade.
Unpacked:
The 6.5% forecast is lower than recent highs; India's GDP grew 9.2% in FY 2024 and 6.5% in FY 2025. Historically, India's annual GDP growth averaged 6.42% from 2006 to 2025, so the 2026 projection is close to the long-term average but below post-pandemic peaks.
A normal monsoon is crucial because over half of India's population depends on agriculture, much of which is rain-fed. Good rainfall supports farm output, boosts rural incomes, and increases demand for goods, positively influencing overall economic growth.
Middle East instability could disrupt global oil supply, leading to higher crude prices. As India imports much of its oil, this would increase energy costs, strain the trade balance, and potentially slow economic growth—posing a key risk to the optimistic GDP forecast.
Income-tax concessions reduce taxes for individuals and businesses, increasing disposable income and consumption. Monetary easing, such as lowering interest rates, makes borrowing cheaper, encouraging investment and spending—both measures stimulate domestic demand and economic growth.