The Indian economy will grow at 6.6 percent in 2025-26. This latest estimate has been made by India Ratings and Research on Wednesday. This estimate for the current financial year is 6.4 percent. The rating agency believes that investment will be a key growth driver for the Indian economy even in FY 2025-26. According to PTI news, the Indian economy has experienced a recession in the last three quarters, which is expected to reverse from the December quarter.
GDP growth got affected because
According to the news, India’s GDP growth till FY 2024 was affected by the after-effects of Covid-19. GDP growth in the June quarter of FY25 was impacted by a combination of strong base effect and general elections in May 2024, while growth in the July-September period saw the extended impact of weak private sector capital expenditure. India Ratings & Research believes that the Indian economy is facing monetary, fiscal and external tightening. The agency said that although monetary conditions are now expected to ease, further fiscal tightening is expected to continue into FY2026.
Expected inflation rate to be this much
Devendra Kumar Pant, chief economist and head of public finance, India Ratings and Research, said that despite all this, GDP growth for FY26 is expected to be similar to India’s best decadal growth (FY11-FY20). India Ratings & Research is of the view that if the dollar continues to strengthen, growth and inflation forecasts could be impacted by any tariff war and any capital outflows. Retail inflation is expected to average 4.4 percent in FY2026, which is lower than the forecast of 4.9 percent in FY25.
What did you say about interest rate cuts?
The timing of the interest rate cut will depend on how the incoming data – the FY26 Union Budget scorecard, inflation projections and the evolving domestic and global outlook – align with the RBI’s flexible inflation targeting approach. The rating agency said the merchandise trade account is expected to have a deficit of US$308 billion in fiscal year 2026.
