India’s real gross domestic product (GDP) growth will be steady at 6.5% in fiscal 2026 despite uncertainties stemming from geopolitical turns and trade-related issues led by U.S. tariff actions, Crisil said at its India Outlook seminar on Thursday.
The forecast is based on two assumptions which include another spell of normal monsoon and commodity prices continuing to remain soft.
Cooling food inflation, the tax benefits announced in the Union Budget 2025-2026, and lower borrowing costs are expected to drive discretionary consumption, Crisil said.
The National Statistics Office (NSO) recently estimated India’s FY25 real GDP growth to be at 6.5%.
Amish Mehta, Managing Director and CEO, Crisil Ltd., said, “India’s resilience is being tested again. Over the past few years, we have built a few safe harbours against exogenous shocks — healthy economic growth, low current account deficit and external public debt, and adequate forex reserves — which provide ample policy latitude.”
“So, while the waters can turn choppy, consumption-led rural and urban demand will be crucial to short-term growth. On the other hand, continuing investments and efficiency gains will aid in the medium term. We foresee both manufacturing and services supporting growth through fiscal 2031,” he said.
According to CRISIL, manufacturing growth is expected to average 9% per year over fiscals 2025-2031, up from 6% on average in the pre-pandemic decade. The services sector is expected to grow slower, though it will remain the primary growth driver. As a result, the share of manufacturing in GDP will increase to 20% from 17% in fiscal 2025, it said.
Dharmakirti Joshi, Chief Economist, Crisil Ltd., said, “India has continued to raise its growth premium over advanced countries through infrastructure buildout, economic reforms including process improvement.”
“Healthy GDP growth, a low current account deficit and adequate forex reserves provide buffer and policy flexibility, but do not insulate the country from external shocks. The risks to the growth forecast of 6.5% are therefore titled to the downside given elevated uncertainty due to the U.S.-led tariff war,” he said.
Corporate India’s revenue growth is expected to improve to 7-8% on-year in fiscal 2026 vs 6% in fiscal 2025, closing in on the decadal average of 8% growth logged over fiscals 2016-2025, Crisil said, adding, “This will be led by healthy growth in consumption sectors and will be largely volume-led.”
Published – March 06, 2025 08:36 pm IST
