New Delhi, April 14, 2025 – Global credit rating agency CRISIL has projected India’s GDP growth at 6.5% for the fiscal year 2025-26, while cautioning that rising US tariffs pose a key downside risk to the forecast. The outlook is supported by expected domestic policy support and favorable external conditions, but external trade uncertainties remain a significant concern.
According to CRISIL, monetary easing by the Reserve Bank of India (RBI) is likely to provide some cushion against external headwinds. The agency also cites a combination of interest rate cuts, income tax relief, and easing inflation as key factors that will drive consumption during the fiscal. Additionally, a normal monsoon is expected to bolster rural and agricultural incomes, enhancing overall demand.
The report also notes that a potential decline in global crude oil prices, driven by a slowing global economy, could lend further support to India’s growth momentum.
Despite these positive drivers, CRISIL warns that the uncertainty surrounding the duration and frequency of US tariff hikes could dampen investment sentiment and growth prospects. The agency emphasizes that policy unpredictability in global trade remains a critical variable for India’s economic trajectory.
In the current fiscal (FY25), signs of revival in capital expenditure and construction activities are becoming more evident, particularly in the latter half of the year. An uptick in high-frequency indicators such as the RBI’s Quarterly Industrial Outlook and Consumer Confidence Survey signals improved demand across both rural and urban regions.
Industrial growth, as tracked by the Index of Industrial Production (IIP), moderated to 2.9% in February from 5.2% in January, mainly due to lower output in mining and manufacturing. However, electricity production witnessed a modest rise. Average IIP growth stood at 4.0% for Q4 FY25, closely mirroring the 4.1% recorded in the December quarter.
Sub-sector performance within the IIP indicates stronger growth in petroleum products, machinery, and textiles during the second half of FY25, reflecting improved momentum in manufacturing.
Source: “Crisil Projects 6.5% GDP Growth For FY26, Flags US Tariff Hikes As Key Risk”, Free Press Journal, April 14, 2025. Link to original article
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