India’s GDP Growth To Hold Steady At 6.5% In FY26: Crisil

According to a Crisil report released on Thursday, India’s real GDP is likely to grow at 6.5% in FY26, despite uncertainties from geopolitical developments and US-led trade actions.

The forecast hinges on two key factors:

• A normal monsoon, and
• Stable commodity prices

The report highlights that lower food inflation, tax incentives from the Union Budget 2025-26, and reduced borrowing costs will support discretionary spending.

Growth is returning to pre-pandemic levels, aided by a normalization of fiscal support and diminishing high-base effects.

Meanwhile, high-frequency PMI data suggests that India continues to outperform major global economies.

Manufacturing & Services To Fuel Growth Through FY31: Crisil CEO

Crisil MD & CEO Amish Mehta stated, “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.”

While external uncertainties persist, domestic demand, both rural and urban, will be a key driver of 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,” Mehta further added.

The report projects that manufacturing will grow at an average of 9% annually from FY25 to FY31, compared to 6% in the pre-pandemic decade.

With services continuing as the leading growth driver, manufacturing’s share in GDP will likely rise from 17% in FY25 to 20%.

Additionally, lower inflation and fiscal consolidation have created room for policy rate cuts.

The report noted, “We expect another 50-75 basis point rate reduction over the next fiscal, although slowing US Fed rate cuts and weather-related risks could influence the timing and quantum of these cuts.”

India has expanded its growth premium over developed nations through infrastructure expansion and economic reforms.

Crisil Chief Economist Dharmakirti Joshi cautioned, “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 per cent are, therefore, titled to the downside given elevated uncertainty due to the US-led tariff war.”

Also Read: India’s Q4 GDP Growth Set To Accelerate As Economic Indicators Improve