S&P Global Ratings cut India’s GDP growth projection to 6.5% for the next fiscal amid expectations that the economies in the Asia-Pacific region will feel the strain of rising US tariffs and a pushback against globalisation.
In its Economic Outlook for Asia-Pacific (APAC), S&P said that despite these external strains, it expects domestic demand momentum to remain solid in most emerging-market economies.
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“India’s GDP will grow 6.5% in the fiscal year ending March 31, 2026, we expect. Our forecast is the same as the outcome for the previous fiscal year, but less than our earlier forecast of 6.7%,” S&P said.
Cooling food inflation, tax benefits announced in the country’s budget for the fiscal year ending March 2026, and lower borrowing costs will support discretionary consumption in India, S&P said.
The global rating agency’s forecast also assumes a normal monsoon season and soft commodity prices, especially crude.
It also projected the Reserve Bank of India to cut interest rates by 75-100 basis points in the current cycle.
Easing food inflation and lower crude prices will bring headline inflation closer to the central bank’s 4% target in the fiscal year ending March 2026, while fiscal policy remains contained, S&P said.
S&P further expects the US Federal Reserve to cut its policy rate by 25 basis points only once in late 2025 and make three such cuts in 2026.
It further said that Asia-Pacific economies will feel the strain of rising US tariffs specifically and a broader pushback against globalisation.
“However, we see domestic demand momentum broadly holding up, especially in the region’s emerging-market economies.”
“Given the volume of policy measures and external pressures hitting Asia-Pacific, the robustness of our forecasts underscores the resilience of the regional economies,” it added.
