India’s GDP to grow 6.5% this fiscal: Crisil

New Delhi

India’s economy is expected to grow by 6.5% in the current fiscal year (FY26), supported by strong domestic consumption, according to a report released by Crisil on Monday. The report highlights improved consumer demand, above-normal monsoon, recent income tax relief, and Reserve Bank of India’s (RBI) interest rate cuts as key drivers of growth.

India’s GDP had grown 6.5% in FY25, with growth accelerating to 7.4% in the fourth quarter. Crisil, however, cautioned that global uncertainty due to U.S. tariffs remains a key risk to India’s growth outlook.

Inflation is also expected to ease this fiscal. Consumer Price Index (CPI) inflation hit a 77-month low of 2.1% in June, mainly due to falling food prices. Crisil forecasts average inflation to settle at 4% in FY26, down from 4.6% last year, aided by a good monsoon and stable global oil prices.

The report expects the RBI to deliver one more repo rate cut this fiscal, following a 100 basis point cut between February and June 2025. The central bank’s policy stance has now shifted from accommodative to neutral.

India’s fiscal deficit target has been lowered to 4.4% of GDP, down from 4.8% last year. Strong revenue collection and reduced government spending helped limit the deficit to just 0.8% of the target by May.

Gross market borrowing is set at ₹14.8 lakh crore for FY26, with 54% planned for the first half. Crisil also expects the current account deficit to rise to 1.3% of GDP, compared to 0.6% last fiscal.