India’s Current Account Deficit to Widen in FY26, GDP to Grow 6.5%: Crisil

India’s economy is projected to grow at a rate of 6.5% in FY26, slightly improving from the 6.4% growth forecasted for the current fiscal year (FY25). Crisil’s report highlights several factors driving this growth, including lower inflation, expected rate cuts by the Reserve Bank of India (RBI), and favorable conditions such as a normal monsoon and stable global crude oil prices. However, the report also underscores potential challenges, including global trade barriers, weak export performance, and the need for stronger private sector investments.

Key Points

GDP Growth

• India’s economy is expected to grow by 6.5% in FY26, up from 6.4% in FY25.

Inflation Outlook

• Consumer Price Index (CPI) inflation is projected to ease from 4.7% in FY25 to 4.4% in FY26.

Monetary Policy Support

• The RBI is expected to implement rate cuts, aiding economic growth.

Fiscal Deficit Reduction

• India’s fiscal deficit is expected to decline from 5.6% of GDP in FY24 to 4.4% in FY26.

External Challenges

• The current account deficit (CAD) is projected to widen slightly from 1% in FY25 to 1.3% in FY26 due to export challenges and trade policies, especially from the United States.

Private Investments

• A key determinant of growth will be the increase in private sector investments, which is crucial for sustaining economic expansion.

Currency Depreciation

• The Indian rupee is expected to gradually depreciate to Rs 87 per dollar by FY26.