S&P Global Raises India's GDP Growth Forecast for FY26 to 6.5% from 6.3%

S&P Global Ratings has upgraded India’s GDP growth forecast for the financial year 2025–26 (FY26) to 6.5%, revising its earlier estimate of 6.3%. The upgrade reflects improving economic momentum backed by a normal monsoon outlook, softening crude oil prices, income-tax concessions, and room for monetary easing.

The revised projection, published in the agency’s latest “Economic Outlook Asia-Pacific Q3 2025: Resilience May Vary”, now aligns with the Reserve Bank of India’s own growth forecast of 6.5% for FY26.

Strong Domestic Demand Shields India from Global Slowdown

S&P highlighted that India’s resilient domestic demand remains a critical buffer against global headwinds, especially for economies less dependent on goods exports. “India’s GDP growth is expected to hold up at 6.5% in FY26, assuming a normal monsoon, lower oil prices, monetary easing, and income tax relief,” the report stated.

Middle East Turmoil Poses Risks to Asia-Pacific Economies

The report flagged the escalating conflict in the Middle East, particularly the recent US strikes on Iranian nuclear facilities, as a potential risk to energy markets. Given India’s heavy reliance on energy imports, 90% of crude oil and about 50% of natural gas, the economy remains vulnerable to extended price shocks. However, S&P tempered its warning, noting that global energy markets are currently well-supplied, making any long-term disruption to oil prices unlikely.

Recent Global Uncertainties Had Earlier Trimmed Projections

Just last month, S&P had trimmed India’s FY26 growth forecast by 20 basis points to 6.3%, citing rising global uncertainties and concerns over US import tariffs. Now, the upward revision reflects improved confidence in domestic economic momentum amid easing inflationary pressures and favorable monetary conditions.

Key Highlights:

• India’s revised FY26 GDP growth: 6.5%, up from 6.3%
• Assumptions: Normal monsoon, lower crude prices, monetary easing, tax relief
• Oil dependency: 90% of crude and 50% of natural gas imported
• Geopolitical risk: Middle East tensions and US-Iran conflict flagged
• S&P’s outlook aligns with RBI’s growth forecast

India’s economic resilience, driven by domestic consumption and policy support, continues to position it as a relative bright spot in a turbulent global landscape.

Disclaimer:  At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations