GDP growth rate
American global company S&P Ratings said on Monday that India’s economic growth this year will be 6.5% and next year it is expected to be 6.7%. The agency said that the recent reduction in taxes and availability of cheap loans will increase the spending capacity of the people. This will maintain demand, because families are getting the benefit of both low tax and cheap loans.
S&P said in its Asia-Pacific economic report that we expect India’s GDP to grow at a pace of 6.5% in FY 2026 and 6.7% in FY 2027. Despite the impact of US tariffs, economic growth in the country remains good due to strong consumption. India’s real GDP grew 7.8% in the April-June quarter, the fastest in the last five quarters. The official figures for the July-September quarter will come on November 28, which will clearly show the pace of the second half of the year.
A survey conducted by ET among 12 economists revealed that India’s economic growth could be 7.3% in the second quarter due to stable demand in rural areas, increased government spending and initial export growth. Estimates ranged from 6.9% to 7.7%, and the average was 7.3%. The National Statistics Office will release official figures on November 28, while the RBI has projected growth of 7% for the quarter. The Reserve Bank of India has estimated growth at 6.8% this financial year, which is better than last year’s 6.5%. S&P said that if India signs a trade agreement with the US, it will reduce uncertainty and increase confidence. This will benefit those industries where more workers are employed and which have been affected by low global demand.
Benefit from GSAT cut
Lower GST rates will boost middle class spending and will complement the income tax cuts and interest rate cuts this year. With these changes, consumption (spending) will become a bigger force of economic growth than investment in the coming times. In June, RBI had reduced its main interest rate by 50 basis points to 5.5%, which is the lowest in three years. From September 22, GST was reduced on about 375 items, due to which everyday items became cheaper.
S&P said that the high tariffs imposed by America on India are hurting export-dependent factories. However, there are some indications that America may reduce tariffs on Indian goods. S&P said that due to America’s new trade policy, governments and companies are spending a lot of time and money to get exemptions, due to which the focus is reducing on improving productivity.