India to grow at 6.4% in FY25 and FY26: S&P Global Market Intelligence

S&P Global MI forecasts 6.4% growth in FY26

Indian economy will likely grow at the same pace (6.4 percent) in the coming fiscal, with the monetary and fiscal stimulus helping the economy in an increasingly challenging global environment, S&P Global Market Intelligence said on February 24.

The global analytics firm had predicted the economy to grow 6.5 percent in its December update while projecting 6.4 percent growth for the coming year.

The firm predicts the economy to slow down further to 6.2 percent in FY27, before recovering to 6.6 percent in FY28.

In the near term, S&P noted that tax relief and the central bank’s monetary easing will help support domestic demand.

“Tax relief measures announced in the 2025 Union budget, combined with the 25-basis-point policy rate reduction by the Reserve Bank of India (RBI) in February, should support domestic demand in fiscal year 2025 but may not be sufficient to fully offset the impact of external headwinds on growth,” it said.

RBI’s Monetary Policy Committee delivered its first rate cut in five years in February, bringing the policy rate down to 6.25 percent from 6.5 percent earlier.

The central bank, however, kept the policy stance neutral, giving it the flexibility to adjust to changing scenarios.

“We expect the Reserve Bank of India to lower policy rates by another 25 basis points in April,” S&P Global Market Intelligence noted.

A Moneycontrol poll conducted last week also pegged the probability of a rate cut in April at 78 percent, with nearly 90 percent of economists expecting a cut in April.

The policy rate is likely to settle at 5.75 percent by the end of the fiscal.