India To Expand Close To Its Trend Growth In FY26, Monetary Easing, Income Tax Reductions, Good Monsoon Rains To Bolster Consumption Demand

India To Expand Close To Its Trend Growth In FY26, Monetary Easing, Income Tax Reductions, Good Monsoon Rains To Bolster Consumption Demand

The confidence on India’s growth outlook comes even as the bank has lowered its 2025 global growth forecast slightly to 3.1 per cent from the 3.2 per cent earlier amid still-elevated trade policy uncertainty.

IANSUpdated: Tuesday, July 22, 2025, 02:22 PM IST
article-image
File Image |

New Delhi: India is expected to expand close to its trend growth in FY26, supported by better consumption demand on recent monetary easing, income tax reductions, good monsoon rains, and the prospect of continued lower oil prices, according to a report on Tuesday.

The Standard Chartered global outlook report expects India to clock steady GDP growth of 6.6 per cent in FY26 compared to 6.5 per cent in FY25. While strong macro fundamentals provide the cushion, the bank also flags that India is not immune to tariff risk and the outcome of trade talks with the US and the EU will be key to growth prospects.

The confidence on India’s growth outlook comes even as the bank has lowered its 2025 global growth forecast slightly to 3.1 per cent from the 3.2 per cent earlier amid still-elevated trade policy uncertainty.Anubhuti Sahay, Head of India Economic research, expects improvement in real purchasing power in FY26.

However, she also said, “While urban demand is expected to stay supported on countercyclical measures, urban households may partially use the benefits from lower rates and tax cuts to deleverage and boost savings.”“A combined fiscal deficit sustainably below 7 per cent of GDP is an important criterion for a rating upgrade, as highlighted by S&P when it upgraded India’s sovereign rating outlook to positive in 2024. FY26 will be the first year when combined fiscal deficit will be below 7 per cent of GDP.

We also see a high probability of it staying below 7 per cent on a medium-term basis,” Sahay added.Overall, globally, the report sees growing downside risks to the US economy in H2 2025, after greater resilience than expected in H1. The inflationary impact of US tariffs is likely to constrain Fed monetary easing, with scope for one more 25bps rate cut in 2025, although there is a risk of a bigger 50 bps move at the September meeting.

China’s trend growth is likely to slow. While the worst of the US-China trade war appears to be over, with China’s dominance of rare-earths production proving to be an effective bargaining tool, China’s economy remains vulnerable to higher effective tariffs. Export growth, a key source of growth since COVID-19, could slow meaningfully by the end of 2025, the report added.

Disclaimer: This story is from the syndicated feed. Nothing has been changed except the headline.

RECENT STORIES

7th Pay Commission: DA Hike Likely Before 8th Pay Commission, 3-4% Increase Expected From July

7th Pay Commission: DA Hike Likely Before 8th Pay Commission, 3-4% Increase Expected From July

Axis Bank's Additional 10% Stake Purchase In Axis Max Life Can Rake In ₹5,000 Crore

Axis Bank's Additional 10% Stake Purchase In Axis Max Life Can Rake In ₹5,000 Crore

Karnataka: Vegetable Vendor Receives GST Notice To Pay ₹29 Lakh; Had Made Transactions Worth...

Karnataka: Vegetable Vendor Receives GST Notice To Pay ₹29 Lakh; Had Made Transactions Worth...

Sensex Today: Markets End Flat Amid Volatility, Eternal Soars Over 10% Post Results

Sensex Today: Markets End Flat Amid Volatility, Eternal Soars Over 10% Post Results

India Young Professionals Scheme Ballot Opens; Opportunity For Youth Between 18 & 30 Years To Live &...

India Young Professionals Scheme Ballot Opens; Opportunity For Youth Between 18 & 30 Years To Live &...