India’s Economy to Grow 6.6% in FY26: Report
India is expected to grow by 6.6% in the financial year 2025–26 (FY26), according to a new report by Standard Chartered Bank. This is slightly higher than the 6.5% growth expected in FY25.
The growth will be helped by stronger consumer demand, lower interest rates, recent income tax cuts, good monsoon rains, and the chance of continued low oil prices.
India’s economic fundamentals remain strong, but the report warns of risks. Trade talks with the US and the EU are still ongoing, and new tariffs could affect growth.
While the global growth forecast for 2025 was cut slightly—from 3.2% to 3.1%—Standard Chartered remains confident in India’s outlook. Anubhuti Sahay, Head of India Economic Research at the bank, said that real purchasing power should rise in FY26.
She also noted that lower rates and tax cuts will likely support urban demand. However, city households may use some of the extra money to reduce debt and save more instead of spending.
Sahay added that India’s combined fiscal deficit (the total gap between government income and spending) is set to fall below 7% of GDP for the first time in FY26. This is a key factor for a possible credit rating upgrade, especially after S&P raised India’s outlook to “positive” in 2024. The deficit is also expected to stay below 7% in the years ahead.
Globally, the report sees the US economy slowing down in the second half of 2025. High trade uncertainty and new tariffs could lead to fewer interest rate cuts by the US Federal Reserve. A small rate cut (0.25%) is likely, but a bigger cut (0.50%) may happen in September.
Meanwhile, China’s growth may slow further, especially in exports, due to higher tariffs. While tensions with the US have eased, China’s economy still faces risks, the report said.
