India’s Economy to Grow 6.5% in FY26, US Tariffs Pose Risk
On Monday, Crisil, a global credit rating agency, predicted that India’s economy will grow by 6.5% in the financial year 2026. However, it warned that new US tariffs could lower this growth.
Despite challenges from outside India, Crisil believes the Reserve Bank of India (RBI) will lower interest rates to support the economy. Other positive factors include tax relief, lower inflation, and a good monsoon, which could help farmers earn more and boost spending.
Crisil also noted that falling global oil prices, possibly due to a worldwide economic slowdown, could help India’s economy.
However, US tariffs remain a big concern, as they could discourage investors and slow down investments due to their uncertainty and frequent changes.
For the current financial year (FY25), Crisil sees signs of improvement in the second half, especially in capital goods, infrastructure, and construction, showing a slow rise in construction and investment activities.
Recent data supports this positive outlook. The RBI’s surveys show stronger demand in the last quarter of FY25 and growing confidence among consumers in both rural and urban areas in March.
Crisil added that a good rabi crop and lower inflation in the last quarter will also encourage more spending.
Industrial growth, tracked by the Index of Industrial Production (IIP), slowed to 2.9% in February from 5.2% in January, mainly due to weaker mining and manufacturing. However, electricity production improved. Overall, IIP growth was steady at 4.0% in the last quarter of FY25, with industries like petroleum, machinery, and textiles doing better in the second half of the year.
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