India to grow 6.6% in FY26, driven by investments, easing rates: India Ratings and Research (Ind-Ra)
- IBEF
- December 19, 2024
India Ratings and Research (Ind-Ra) has projected India's economy to grow by 6.6% in FY26, up from 6.4% in FY24. Investments are expected to remain a key driver of growth, like trends in FY22 and FY24. After experiencing a cyclical slowdown over the last three quarters, the economy is anticipated to rebound starting the December quarter. Factors such as the aftereffects of COVID-19 and a powerful base effect impacted growth until FY24. At the same time, private sector capital expenditure (capex) weakness and the May 2024 general elections dampened growth in H1 FY25.
Ind-Ra highlighted monetary, fiscal, and external tightening challenges for the economys. However, monetary conditions are expected to ease, while fiscal and external tightening will persist in FY26. Retail inflation is forecast to average 4.4% in FY26, lower than the 4.9% expected for FY25. The timing of policy rate cuts will depend on data from the FY26 Union Budget, inflation trends, and evolving economic conditions. Ind-Ra forecasts a merchandise trade deficit of US$ 308 billion (Rs. 26,15,536 crore) in FY26, compared to US$ 277.4 billion (Rs. 23,55,681 crore) in FY25 and US$ 244.9 billion (Rs. 20,79,691 crore) in FY24. Chief Economist Mr. Devendra Kumar Pant stated that GDP growth in FY26 is expected to match India’s best decadal performance (2010-11 to 2019-20). However, risks such as a tariff war or capital outflows from a strengthening US dollar could affect these forecasts.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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