Crisil has forecast India’s GDP growth to be steady at 6.5 per cent and the RBI’s Monetary Policy Committee (MPC) to cut the repo rate by 50-75 basis points (bps) in fiscal 2026.
The rating agency estimated GDP growth for this fiscal at 6.5 per cent, slower than 9.2 per cent in the previous fiscal.
However, growth remains close to the pre-pandemic decadal average of 6.6 per cent between fiscals 2011 and 2020 and will allow India to retain its tag of fastest growing large economy.
In its outlook for FY26, the agency said: “We assume the upcoming monsoon season to be normal and commodity prices to remain soft. Private consumption is expected to recover further, while investment growth hinges on private capex.
“The pickup in growth will be mild because of overall lower fiscal impulse. Emerging global risks from potential US tariff hikes are a downside risk for domestic growth.”
Crisil Chief Economist Dharmakirti Joshi; Senior Economist Pankhuri Tandon and Economic Analyst Bhavi Shah, in a note, observed that private consumption is expected to improve further, on expectations of healthy agricultural production and cooling food inflation.
“Softer food inflation should create space in household budgets for discretionary spending. Secondly, the tax benefits announced in Union Budget 2025-2026 and increased allocations towards key asset- and employment generating schemes are expected to support consumption,” they said.
Crisil’s economic research team opined that easing monetary policy by the Reserve Bank of India (RBI) is expected to support discretionary consumption.
The central bank’s recent liquidity-easing measures and easier regulations for non-banking financial companies are expected to transmit the benefits from an easier monetary policy to the broader economy.
“Investment growth hinges on a sustained pick-up in private corporate investment, as the government normalises capex to meet its fiscal deficit target for the next year… With domestic private consumption expected to hold up, imports are expected to remain healthy in fiscal 2026, while exports growth could be subdued because of potential reciprocal tariffs imposed by the US.
“The escalating global trade uncertainty could also lead to increased imports from China as a result of trade redirection. Net exports are likely to be a drag for growth in fiscal 2026,” the economists said.