S&P Global Ratings has reaffirmed its forecast for India’s GDP growth at 6.5% for the current fiscal year (ending March 2026), highlighting the strength of domestic demand despite global headwinds and recent U.S. trade measures.
The agency’s outlook, released on Tuesday, September 23, 2025, comes even as India reported 7.8% GDP growth in the April–June quarter. S&P said growth momentum will remain steady, supported by a benign monsoon season, income tax and GST cuts, and rising government investment.
Inflation Outlook and RBI Policy
In a significant revision, S&P cut its inflation forecast to 3.2% for this fiscal year, citing a sharper-than-expected fall in food inflation. This, the agency noted, provides the Reserve Bank of India (RBI) with room for policy easing.
“We anticipate a 25 bps rate cut by the RBI later this fiscal year,” S&P stated, adding that monetary policy flexibility will help sustain demand-led growth.
Regional Context
The outlook was part of S&P’s Economic Outlook Asia-Pacific Q4 2025: Growth To Ease On External Strain report. It said resilient domestic demand across Asia should cushion economies from slower global growth and the impact of higher U.S. import tariffs.
However, the agency warned that the tariff shock has affected countries unevenly:
- China has weathered the impact better than expected.
- Southeast Asian emerging markets have been hit harder.
- India has been “much harder hit than expected” by U.S. tariffs, affecting export prospects and regional supply chain positioning.
Outlook for India
Despite these challenges, S&P maintained confidence in India’s ability to sustain 6.5% growth, pointing to its large domestic market and government-led investments as buffers against external volatility.
For policymakers, the focus will now be on balancing growth with inflation management, while investors watch for signs of the anticipated RBI rate cut.
