India's GDP to Grow 7% in FY26, Crisil Raises Growth Forecast
The ratings and analytics firm revised its GDP forecast following first-half growth of 8 per cent, which exceeded market expectations
New Delhi: Crisil on Monday said the Indian economy is poised to grow at 7.0 per cent in the current fiscal year 2025–26, raising its projection by 50 basis points after robust growth in the first half of the year.
The ratings and analytics firm revised its GDP forecast following first-half growth of 8 per cent, which exceeded market expectations. “We expect GDP to grow at 7 per cent in fiscal 2026, compared with 6.5 per cent in fiscal 2025,” Crisil said in its report.
Domestic consumption is expected to remain the key driver of growth, supported by benign inflation, GST rationalisation, and income tax relief. However, Crisil cautioned that US tariffs pose risks to India’s exports and investments, while developments around a potential US–India trade deal remain watchful.
GDP growth rose to a six-quarter high of 8.2 per cent year-on-year in the second quarter of fiscal 2026, up from 7.8 per cent in the previous quarter. The expansion was fuelled by strong consumption and aided by the GST rate rationalisation exercise undertaken in September 2025. Nominal GDP growth, however, eased slightly to 8.7 per cent from 8.8 per cent.
Taking these factors into account, the Reserve Bank of India (RBI) raised its GDP growth projection for the full year to 7.3 per cent, an increase of 50 basis points.
On the inflation front, Crisil expects CPI-based inflation to soften to 2.5 per cent in fiscal 2026, down from 4.6 per cent in fiscal 2025. The firm attributed the easing to a sharper-than-expected fall in food inflation, healthy agricultural output, benign global crude prices, and benefits from GST rate cuts.
Retail inflation eased sharply to 0.3 per cent in October from 1.4 per cent in September, marking the lowest level in the current CPI series. Inflation edged up slightly to a provisional 0.71 per cent in November.
The RBI revised its CPI inflation forecast for 2025–26 to 2.0 per cent, down from an earlier estimate of 2.6 per cent. In this context, Crisil said the central bank’s monetary policy remains open to further rate cuts amid benign inflation, though it is likely to remain data-dependent due to global uncertainties.
In line with expectations, the Monetary Policy Committee cut the policy rate by 25 basis points in its December meeting while maintaining a neutral stance. RBI Governor Sanjay Malhotra described the current macroeconomic environment as a “rare Goldilocks period,” characterised by high growth and exceptionally low inflation. Following the three-day policy review, the RBI reduced the repo rate by 25 basis points to 5.25 per cent.
On crude oil, Crisil expects prices to average between USD 60 and USD 65 per barrel in calendar year 2026, compared with an estimated USD 65–70 per barrel in 2025. Brent crude averaged USD 63.6 per barrel in November, down 1.6 per cent month-on-month and 14.5 per cent year-on-year.