Crisil Forecasts India’s GDP Growth at 6.5% for FY26, Predicts Repo Rate Cut

Crisil, a leading credit rating agency, has forecasted India’s GDP growth to remain steady at 6.5% in fiscal 2026 (FY26). The agency also anticipates that the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) will reduce the repo rate by 50-75 basis points (bps) to support economic growth. While the growth rate is lower than the 9.2% recorded in the previous fiscal year, it remains close to the pre-pandemic average of 6.6% (FY11-FY20), allowing India to retain its status as the fastest-growing major economy.

Key Highlights

India’s GDP Growth Projections

• FY25 Growth Estimate: 6.5% (slower than 9.2% in FY24).

FY26 Growth Forecast: 6.5%, assuming,

• A normal monsoon.
• Stable commodity prices.
• Improved private consumption.
• Sustained private investment growth.
• Growth remains close to the pre-pandemic decadal average (6.6%), maintaining India’s position as the world’s fastest-growing large economy.

RBI’s Monetary Policy & Interest Rates

• MPC is expected to cut repo rates by 50-75 bps in FY26 to support economic expansion.
• RBI’s recent liquidity-easing measures and easier regulations for NBFCs are expected to enhance monetary policy transmission to the economy.

Factors Influencing Economic Growth

1. Private Consumption

Expected to recover further, driven by,

• Healthy agricultural production due to normal monsoon.
• Cooling food inflation, increasing discretionary spending power.
• Tax benefits in the Union Budget 2025-26.
• Higher allocations for asset-building and employment-generating schemes.

2. Investment Growth & Private Capex

• Growth in investment depends on private sector participation, as the government reduces capital expenditure (capex) to meet fiscal deficit targets.
• Corporate investment needs to pick up for sustained economic momentum.

3. Trade & External Factors

• Imports expected to remain healthy due to strong domestic consumption.
• Export growth may slow down due to:
• Potential US tariff hikes, posing downside risks to trade.
• Increased trade uncertainty, leading to higher Chinese imports due to global trade redirection.
• Net exports likely to be a drag on GDP growth in FY26.