India’s GDP Expected To Grow 6.5% In FY26, With 75-100 Bps Rate Cut, Says Report

The report highlighted that cooling food inflation, tax benefits introduced in India's budget for the fiscal year ending March 2026, and lower borrowing costs will help boost discretionary consumption

Regarding interest rates, S&P Global Ratings anticipates that the Reserve Bank of India will reduce rates by an additional 75 to 100 basis points in the current cycle

Source : ABPLIVE AI

India's GDP is expected to grow at 6.5 per cent in the fiscal year ending March 31, 2026, demonstrating the country's resilience in the Asia-Pacific region amid global uncertainties, according to S&P Global Ratings’ report released on Tuesday. This projection assumes a normal monsoon season and soft commodity prices, particularly crude oil, as noted in the global financial institution's latest quarterly economic update for the Asia-Pacific region.

The report highlighted that cooling food inflation, tax benefits introduced in India's budget for the fiscal year ending March 2026, and lower borrowing costs will help boost discretionary consumption.

S&P also noted that trade in economies with a large share of service exports, such as India and the Philippines, will be more resilient to tariffs, as they are typically imposed on goods.

Regarding interest rates, S&P Global Ratings anticipates that the Reserve Bank of India (RBI) will reduce rates by an additional 75 to 100 basis points in the current cycle. “Cooling food inflation, the tax benefits announced in the country’s budget for the fiscal year ending March 2026, and lower borrowing costs will support discretionary consumption,” according to the report.

Despite the numerous policy measures and external pressures affecting the Asia-Pacific region, the report emphasised that "the strength of our forecasts highlights the resilience of the regional economies."

US Tariff Hikes

However, it noted that the US tariff hikes on Chinese exports would have a negative impact on China’s economy.

"We had incorporated 10 per cent US tariffs in our November baseline, implying an effective US tariff on Chinese exports of about 25 per cent. The additional 10 per cent levies will bring the effective rate to about 35 per cent. That will depress China’s growth via lower exports, investment and other spillover effects," the report stated.

The impact on GDP growth is expected to be most pronounced in Malaysia (due to its semiconductor sector), Singapore (primarily due to pharmaceutical products), and South Korea (mainly because of automobiles), the report added.