India’s GDP Growth Projected at 6.5% for FY26: CRISIL Report

India’s gross domestic product (GDP) growth for the current fiscal year is projected at 6.5 per cent, according to the latest CRISIL report released today. The growth outlook remains positive, supported by strong domestic consumption, a good monsoon, recent tax relief, and the anticipation of further interest rate cuts. However, CRISIL cautioned that the risks are tilted to the downside due to external headwinds and weaker exports.

Exports to the US Fall 11.9% in September

CRISIL highlighted that India’s exports to the United States fell by 11.9 per cent year-on-year in September following the implementation of higher tariffs. The agency noted that global trade uncertainty continues to weigh on India’s growth prospects, though optimism remains if an India–US trade deal materialises soon.

Industrial Growth Steady at 4% in September

The report pointed out that growth in the Index of Industrial Production (IIP) remained steady at 4 per cent year-on-year in September, compared with 4.1 per cent in August. The September quarter recorded stronger industrial activity with 4.1 per cent growth versus 2 per cent in the June quarter. This improvement was driven by robust performance in infrastructure and construction goods (11.5 per cent vs 6 per cent), consumer durables (7 per cent vs 2.7 per cent), and primary goods (2 per cent vs 1.4 per cent).

Domestic Demand and Tax Relief to Drive Expansion

CRISIL expects domestic demand, especially private consumption, to remain a key pillar of growth. The agency credited the recent income tax cuts in the Union Budget 2025–26 and the Goods and Services Tax (GST) rationalisation for improving household spending power. These measures, combined with soft inflation and stable commodity prices, are likely to keep consumption momentum strong in the coming quarters.

RBI Rate Cuts and Low Inflation to Support Growth

The Reserve Bank of India’s rate cuts earlier this year have already lowered borrowing costs across the economy. CRISIL anticipates another rate cut before the end of the year as inflation remains under control. The RBI has also reduced the cash reserve ratio (CRR) by 25 basis points each in September and October, with two more similar cuts expected by November. This is expected to enhance banking system liquidity and further support credit growth. CRISIL also expects inflation to stay benign this fiscal, aided by soft crude oil prices and the GST rationalisation, allowing households more flexibility for discretionary spending.

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