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.

Summary/Static	Details
Why in the news?	Crisil Forecasts India’s GDP Growth at 6.5% for FY26, Predicts Repo Rate Cut
GDP Growth Forecast (FY26)	6.5%
Previous Year’s GDP Growth (FY24)	9.2%
Pre-Pandemic Decadal Average (FY11-FY20)	6.6%
Repo Rate Expectation (FY26)	Cut by 50-75 bps
Key Growth Factors	Normal monsoon, stable commodity prices, higher private consumption, private capex
Challenges	Lower fiscal stimulus, US tariff hikes, global trade risks
Trade Outlook	Strong imports, weaker exports, net exports likely to slow GDP growth