S&P Global Ratings has maintained a positive outlook on India's economic trajectory, projecting a 6.5% GDP growth for fiscal year 2026 and a further rise to 6.7% in fiscal year 2027. This forecast is supported by strong domestic consumption, fiscal stimulus, and easing monetary policy.

The agency's assessment, shared in its Economic Outlook Asia-Pacific report released on Monday, highlights the strength of India's internal growth engines. S&P anticipates that domestic consumption will play a more significant role in economic growth compared to investment in the upcoming fiscal years. Domestic demand remains robust, despite the impact of US tariffs.

S&P believes that policy interventions have played a crucial role in cushioning growth. Recent tax reforms, including the substantial increase in income-tax rebate limits, and aggressive monetary easing by the Reserve Bank of India (RBI) are expected to support household spending in the coming quarters. The Indian government has raised the income-tax rebate ceiling from ₹7 lakh to ₹12 lakh, thereby increasing disposable income for middle-class families. The RBI also reduced interest rates by 50 basis points earlier this year, bringing them to a three-year low of 5.5 per cent. Furthermore, the Goods and Services Tax (GST) rates on a wide range of mass-consumption items were lowered, making essential goods more affordable.

S&P noted that these policy shifts are likely to enhance consumer spending, which currently constitutes more than half of India's GDP. Lowered goods and service tax (GST) rates will support middle-class consumption and complement income tax cuts and interest rate reductions introduced this year. The agency anticipates that domestic consumption will play a more significant role in economic growth compared to investment in the upcoming fiscal years.

In addition to fiscal measures, a favourable monsoon season has contributed positively to agricultural output, thereby boosting rural incomes. This is expected to further stimulate demand within the economy. S&P predicts inflation to moderate around 3.2 per cent, which would enhance real purchasing power for households.

S&P's assessment is supported by recent economic indicators, including a notable 7.8 per cent growth in India's real Gross Domestic Product (GDP) during the April to June quarter, marking the fastest growth rate in five quarters. Official GDP data for the July to September period is scheduled for release on November 28, 2025.

The RBI has projected India's GDP growth in the current fiscal year at 6.8 per cent, better than 6.5 per cent expansion in last fiscal year. S&P further said if India can secure a trade agreement with the US, it will reduce uncertainty and enhance confidence, which would boost labour-intensive sectors.

An ET poll of 12 economists shows expectations that India's economic growth likely quickened to 7.3 per cent in the second quarter, supported by steady rural demand, higher government expenditure and early export shipments. Estimates in the poll ranged from 6.9 per cent to 7.7 per cent, with a median of 7.3 per cent. The National Statistical Office will release the official numbers on November 28, while the RBI has pegged growth for the September quarter at 7 per cent.