S&P retains India’s GDP growth forecast at 6.5% on strong domestic demand

S&P Global Ratings on Tuesday (September 23, 2025) retained India’s GDP growth forecast at 6.5% in the current fiscal, citing strong domestic demand amid a largely benign monsoon.

S&P also said it expects a 25 bps rate cut by the RBI this fiscal as it revised its inflation forecast down to 3.2% for this fiscal year.

India’s GDP grew at 7.8% in the April-June quarter.

“We forecast India’s GDP growth to hold steady at 6.5 per cent this fiscal year (year ending March 31, 2026). We expect domestic demand to remain strong, supported by a largely benign monsoon season, cuts in the income and the goods and services tax, and accelerating government investment,” S&P said in a statement.

S&P said a sharper-than-expected decrease in food inflation will help keep inflation low in the current year.

“This leaves room for further monetary policy adjustments, and we anticipate a 25 bps rate cut by the Reserve Bank of India this fiscal year,” S&P added.

In its Economic Outlook Asia-Pacific Q4 2025: Growth To Ease On External Strain report, S&P said that across the region, relatively resilient domestic demand should dampen the impact from stronger external headwinds following the increase in US import tariffs and slower global growth.

U.S. tariffs on imports from different Asian economies will shape both their export outlook and their role in regional supply chains.

“Relative to our June assumptions on US tariffs, China has so far fared somewhat better than other Asian economies, and Southeast Asian emerging markets somewhat worse. India has been hit much harder than expected,” S&P said.