S&P Retains India’s FY26 GDP Growth Estimate at 6.5%, Sees 25 bps RBI Rate Cut

S&P Global Ratings on Tuesday kept its GDP growth estimate for India at 6.5 percent for the current fiscal year. The rating agency did this estimation based on strong domestic demand in the context of a generally good monsoon.

S&P also stated that it looks for a 25 basis point RBI rate reduction this fiscal year. The agency reduced its forecast for the current fiscal year inflation to 3.2 percent. GDP of India expanded at 7.8 percent in the January-March quarter.

S&P said in a statement, "We estimate India's GDP growth rate to remain stable at 6.5 percent this fiscal year (ending March 31, 2026). We expect domestic demand to remain strong, largely supported by a benign monsoon, income tax and goods and services tax cuts, and a pick-up in government investment."

S&P said that a larger-than-expected decline in food inflation will help keep inflation low in the current year. "This creates room for further monetary policy accommodation, and we expect the Reserve Bank of India to cut interest rates by 25 basis points this fiscal year," S&P said.

In its report, "Asia-Pacific Q4 2025: Growth Weakened by External Pressures," S&P said that relatively resilient domestic demand across the region will mitigate the impact of strong external headwinds following the increase in US import tariffs and slower global growth.

US tariffs on imports from various Asian economies will shape both their export outlook and their role in regional supply chains. "Relative to our June assumptions on US tariffs, China has performed somewhat better so far than other Asian economies, and Southeast Asian emerging markets have performed somewhat worse. India has been more severely impacted than anticipated," S&P said.