India’s economy expected to grow by 6.5% this financial year, according to a new S&P Global Ratings report, and the outlook stays strong as local demand rises and recent policy changes encourage spending. The agency expects even faster progress next year, with growth likely to reach 6.7%. These numbers reflect strong momentum, especially since India recorded 7.8% GDP growth in April-June 2026, the highest in five quarters.
Moreover, officials will release the July-September GDP data on November 28, which will give a clearer picture of current trends. S&P Global also noted that India’s domestic demand remains powerful, even though US tariffs continue to pressure some exports. However, the overall risk level looks balanced, and analysts see no major downside at the moment.
The Reserve Bank of India projects a growth rate of 6.8% for this fiscal year. This would place India above last year’s 6.5% expansion. Stronger demand, better business confidence, and government reforms continue to support this upward trend. Analysts also believe a future India-US trade agreement could lift investor confidence and help labour-intensive sectors, which offer many jobs.
Recently, the government introduced several reforms that boost growth. One major step was a large change in income tax rebates. In the 2025-26 Union Budget, the rebate limit rose from Rs 7 lakh to Rs 12 lakh. Because of this shift, many middle-income families could save nearly Rs 1 lakh crore in total, which increases their spending power.
Additionally, the RBI cut its benchmark policy rate by 0.5%, bringing it down to 5.5%. This is the lowest level in three years. Lower interest rates usually help people and businesses borrow more easily. As a result, spending increases, and investment activity grows.
In September, the government also reduced GST rates on about 375 essential items, making everyday goods cheaper. This change supports household budgets and encourages higher consumer spending, which strengthens the entire economy. Retail demand has already shown improvement, especially in sectors such as food, clothing, consumer electronics, and daily-use products.
S&P Global economist Louis Kuijs said Asia-Pacific growth should stay steady in 2026. However, he also mentioned that further interest-rate cuts may be limited now. He warned that higher global trade restrictions or sudden policy changes could affect investment movement and long-term growth. Because of this, India needs to maintain strong relationships with key global partners, especially the United States.
India also continues expanding its infrastructure plans. New highway projects, metro expansion, renewable-energy investments, and digital-payment systems are improving economic efficiency. These upgrades create jobs and reduce long-term costs for businesses.
Overall, India’s economy is expected to grow as strong domestic demand, tax reforms, and lower interest rates work together to support expansion. With better trade relations and steady policy decisions, many investors see India as one of the most promising markets in the coming years.
