India's Economic Forecast: Navigating Between Headwinds and Tailwinds
India Ratings & Research (Ind-Ra) revised India's growth forecast for FY26 to 6.3% due to global uncertainties and weak investments. Despite monetary easing and improved inflation rates, US tariffs and cautious investor sentiment pose challenges for growth. Ind-Ra highlights monetary easing and capital expenditure as key growth drivers.
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In a revised forecast, India Ratings & Research (Ind-Ra) has adjusted India's growth projection for the fiscal year to 6.3%, down from an earlier estimate of 6.6%. This revision comes amidst global uncertainties, particularly due to US tariff policies and a sluggish investment climate.
Despite headwinds such as uncertain global scenarios and weaker investment momentum, Ind-Ra identifies monetary easing, declining inflation, and favorable monsoon as counteracting tailwinds. India's economy showed a growth of 6.5% in 2024-25, positioned below the projections by the Reserve Bank of India and Asian Development Bank for FY26.
The agency anticipates that monetary easing and increased capital expenditure will be significant growth drivers. However, global economic uncertainties influenced by US tariff hikes have led investors to exercise caution, hindering potential greenfield expansions and moderating overall growth expectations.
(With inputs from agencies.)
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