Crisil Revises India’s FY26 GDP Growth Forecast Upward to 6.5%.

Economy Business

On July 1, 2025, global rating agency Crisil raised India’s GDP growth forecast for fiscal 2025–26 to 6.5%, citing favourable factors like above-normal monsoon, expected rate cuts, and strong rural and government spending.


      - The revision reflects an improved outlook following the India Meteorological Department’s forecast of a 106% monsoon (above the long-period average), which is expected to boost agricultural output, raise rural incomes, and spur discretionary consumer spending.

      - Crisil projects additional RBI rate cuts of around 50 basis points during FY 26, building on the existing 100 bps reduction since February; this easing cycle will lower lending costs and stimulate private investment and consumption.

      - Strong capital expenditure (capex) momentum underpins the forecast: in May, central government capex jumped 38.7%, while 17 major states reported a combined 44.7% increase year-on‑year—lifting output of infrastructure and construction goods by 6.3%.

Main Point :-   (i) Rural demand is expected to strengthen in FY26, driven by targeted income tax relief measures and a significant increase in budgetary allocations under rural development schemes, such as PM-KISAN and MGNREGA. These measures are likely to uplift rural incomes and accelerate private consumption, which accounts for over 55% of India’s GDP.

      (ii) However, Crisil warns that U.S. tariff hikes from July 2025, industrial output softening (IIP slowed to 1.2% in May), and geopolitical uncertainty pose significant downside risks to exports and private investment.


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