India's growth to be highest among advanced, emerging Group of Twenty (G20) nations: Moody's

Moody’s projects India to record the highest Gross Domestic Product (GDP) growth among advanced and emerging G20 nations, with an estimated 6.5% growth in FY26. The sustained momentum is attributed to government tax reforms, monetary easing, and strong domestic demand. Inflation is expected to moderate, averaging 4.5% in FY26, compared to 4.9% in FY25. The Reserve Bank of India (RBI) has cut interest rates by 25 basis points to 6.25% in February, with further reductions anticipated in April 2025 to support growth. Additionally, the income tax rebate limit has been raised to Rs. 12 lakh (US$ 14,014.38) from Rs. 7 lakh (US$ 8,175.06), providing relief worth Rs. 1,00,000 crore (US$ 11.68 billion) to the middle class.

India remains well-positioned to attract global capital due to its large domestic economy, deep capital markets, moderate policy credibility, and strong foreign exchange reserves. The country’s low external vulnerability indicator (61%) and a high proportion of domestic currency-denominated external debt reduce exposure to global financial shocks. Comparatively, China’s growth is driven by exports and high-tech investments. However, it faces weak domestic consumption. Brazil and India are better placed than Argentina and Colombia, which have higher risks due to foreign currency-denominated debt. Moody’s also highlights that United States policy shifts and global trade fluctuations may challenge emerging markets. However, India’s diversified economy provides resilience against such external risks.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.