S&P Global raises India’s FY26 GDP growth projection to 6.5%

New Delhi: S&P Global on Tuesday raised its forecast for India’s economic growth for the current financial year to 6.5% from its earlier estimate of 6.3% citing monetary easing, lower crude oil prices and normal monsoon.

In its latest Asia-Pacific Economic Outlook report, the rating agency said India’s domestic demand growth is likely to remain more resilient than exports.

“We see India’s GDP growth holding up at 6.5% in fiscal 2026 (year ending March 31, 2026). That forecast assumes a normal monsoon, lower crude oil prices, income-tax concessions and monetary easing,” the rating agency said.

S&P Global’s growth projection for the Indian economy is in line with the Reserve Bank of India’s estimate. The RBI Monetary Policy Committee earlier this month pegged India’s gross domestic product (GDP) growth for 2025-26 at 6.5%. For April-June quarter the growth is pegged at 6.5%; Q2 at 6.7%; Q3 at 6.6% and Q4 at 6.3%.

While S&P flagged heightened risks to the global economy due to geopolitical turbulence in West Asia, it ruled out any major spike in oil prices. “Current conditions on global energy markets, which are well-supplied, make such long-term impact on oil prices unlikely,” it said.

Oil prices had spiked in the last two weeks due to the concerns over the closure of the Strait of Hormuz, a key shipping route for oil and gas, amid escalation in the Israel-Iran conflict. However, crude oil prices slumped by around 5% on Tuesday after Israel and Iran agreed to a ceasefire brokered by US President Donald Trump.

Interestingly, last month S&P Global lowered India’s GDP growth projection by 20 basis points to 6.3% citing uncertainties over the US tariff policy. The rating agency has gone back to its earlier projection of 6.5%.

Projections by other major agencies are lower. Earlier this month, the World Bank in its Global Economic Prospects report lowered India’s economic growth projection to 6.3%, citing weaker external demands and trade barriers.

In April, the International Monetary Fund (IMF) had lowered India’s GDP growth projection for the current financial year by 30 basis points to 6.2%.

During the financial year ended March 2025, the Indian economy posted a growth of 6.5%, which was the slowest pace of expansion since Covid pandemic hit 2020-21, as per the latest data released by the National Statistics Office.

Despite the slowdown, India maintains its position as the fastest growing major economies in the world.