S&P pegs India's FY26 GDP growth at 6.5%; tax cuts to drive consumption
- IBEF
- November 25, 2025
S&P Global Ratings has projected India’s Gross Domestic Product (GDP) growth at 6.50% in FY26, supported by strong domestic consumption, tax cuts, and monetary policy easing. It noted that India recorded 7.80% growth in Q1 FY26, the fastest pace in five quarters, and expects growth to remain robust despite the impact of higher United States (US) tariffs. The agency added that securing a trade agreement with the US would help reduce uncertainty and strengthen confidence, particularly for labour-intensive export sectors. The Reserve Bank of India (RBI) has estimated GDP growth for FY26 at 6.80%, higher than the 6.50% recorded in the previous year.
S&P highlighted that recent policy measures are set to lift consumption further. Income tax rebates were increased to Rs. 12,00,000 (US$ 13,459.03), providing Rs. 1,00,000 crore (US$ 11.21 billion) in relief to middle-income households. At the same time, the central bank reduced policy rates by 50 basis points to 5.50%, the lowest in three years. Goods and Services Tax (GST) rates were also cut on about 375 items from September 22, making mass-market products more affordable. Although rising US tariffs have weighed on export-oriented manufacturing, S&P noted early signs of tariff reduction discussions. The agency assessed India’s growth outlook as balanced, underpinned by steady domestic demand and structural reforms.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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