Despite global headwinds, India’s domestic strength and policy support keep growth outlook robust
India’s economic resilience continues to shine amid global uncertainty. S&P Global Ratings has revised India’s GDP growth forecast for the current fiscal year (FY26) upward to 6.5%, citing key domestic tailwinds such as an expected normal monsoon, easing crude oil prices, income-tax relief, and a shift toward monetary policy loosening, reported timesofindia.indiatimes.com.
In its latest Asia-Pacific Economic Outlook released on Tuesday, S&P noted that countries with lower dependency on goods exports—like India—are better positioned to maintain growth momentum. The rating agency added, “We see India’s GDP growth holding up at 6.5% in fiscal 2026 (year ending March 31, 2026). That forecast assumes a normal monsoon, lower crude oil prices, income-tax concessions and monetary easing.”
S&P says India’s economy is expected to withstand global turbulence, thanks to strong domestic demand and favourable economic policies
This marks a reversal from S&P’s earlier projection in March 2025, when it had trimmed the estimate to 6.3% due to mounting global uncertainty and elevated US tariffs. The revised projection now aligns with the Reserve Bank of India’s own 6.5% forecast, which was reaffirmed earlier this month.
While the report expressed concerns about the fragile state of the global economy—especially in light of rising geopolitical tensions and U.S. protectionist measures—it emphasized that India’s strong domestic consumption and fiscal measures offer a cushion against external shocks.
On energy security, the agency acknowledged India’s vulnerability, noting that the country imports nearly 90% of its crude oil and about half of its natural gas. S&P warned that sustained high oil prices, possibly driven by Middle East tensions, could strain current accounts and fuel inflation in energy-importing nations across Asia-Pacific.
However, the agency struck a reassuring note, stating: “Current conditions on global energy markets—which are well supplied—make such long-term impact on oil prices unlikely.”
This update comes amid heightened Middle East unrest, with American forces recently targeting Iran’s major nuclear facilities following escalations between Israel and Iran. S&P flagged that ongoing global trade and investment disruptions—exacerbated by elevated U.S. tariffs—remain a concern for overall international growth.
Nonetheless, India appears well-positioned to weather these storms, buoyed by internal economic drivers, fiscal prudence, and timely policy interventions.
