Crisil has upgraded its gross domestic product (GDP) growth forecast for India to 6.5 per cent for the ongoing financial year, citing multiple tailwinds including expectations of a robust monsoon season, continued monetary policy easing, and targeted government support for rural areas.
The ratings agency’s latest report points to projections from the India Meteorological Department (IMD), which anticipates an above-normal southwest monsoon in FY26, pegged at 106 per cent of the long-period average. This is likely to significantly boost agricultural output and, in turn, fuel discretionary spending, especially in rural markets.
The Reserve Bank of India (RBI), which has already trimmed rates by 100 basis points during the current easing cycle, is expected to implement at least one more rate cut this fiscal. Crisil notes that this could further encourage borrowing and stimulate demand in the domestic economy.
On the fiscal front, increased budgetary allocations for rural development, along with income tax relief measures announced for FY26, are expected to strengthen private consumption. These initiatives are part of the government’s broader effort to uplift rural income and spur economic momentum from the grassroots.
Capex And Investment-Related Output
Robust growth in government capital expenditure (capex) has been another bright spot. In May, central government capex expanded by 38.7 per cent year-on-year, while data from 17 major states showed a 44.7 per cent rise during the same period. This uptick supported strong output growth in investment-related goods, with infrastructure and construction goods output accelerating to 6.3 per cent from 4.7 per cent a month earlier.
Concerns Over Exports
Despite these positive indicators, the report flagged concerns regarding external trade and private sector investments. The upcoming reciprocal tariffs imposed by the United States, effective from July 9, are likely to impact India’s goods exports in FY26. Additionally, lingering global uncertainty could weigh on fresh private investments.
Industrial Output Shows Mixed Performance
Industrial output data for May revealed a slowdown, with the Index of Industrial Production (IIP) rising just 1.2 per cent year-on-year, compared to 2.6 per cent in April, marking the weakest growth since August 2024. Sectors such as electricity, pharmaceuticals, chemicals, and textiles posted output declines, while investment-driven goods showed resilience. Export-oriented industries, meanwhile, reported uneven performance.
-
Book release: ‘Keep me like this’
-
Make A Splash This Monsoon: 5 Stylish Wardrobe Essentials For The Rainy Season | Lifestyle News
-
These new partners are moving in with their significant other’s exes for the sake of their kids: ‘It just makes sense’
-
What to do first when the phone is wet? It is important to know this or else the loss of battery and motherboard
-
Do not consume these 4 things with yogurt, otherwise food poisoning may be! Know the full list
