India Ratings and Research (Ind-Ra) raised India's FY2025–26 GDP growth projection to 7% year-on-year — an upward revision of 70 basis points from the 6.3% projected in July 2025. The revision was driven by: (i) milder impact of US tariff hikes on global growth than initially feared; (ii) GST rationalisation boosting consumption; and (iii) faster-than-expected decline in inflation, which increased real wage rates particularly in rural areas. Ind-Ra projected Q2 FY26 GDP growth at 7.2%, with Private Final Consumption Expenditure (PFCE) expected to grow at 7.4% in FY26 (up from 6.9% in the July forecast). Rural demand recovery — aided by normal monsoon, improved agricultural output, and lower food inflation — was identified as a key growth engine. India's GDP growth of 7% would make it the world's fastest-growing major economy in FY26, ahead of China's projected 4.5–5%. This forecast aligns broadly with IMF, World Bank and RBI projections of 6.5–7% for India. The strong growth outlook reinforces India's position as a preferred destination for global manufacturing and investment under the 'China+1' strategy.
Ind-Ra Revises India's FY26 GDP Growth Forecast to 7%: GST Rationalisation and Declining Inflation as Key Drivers
India Ratings and Research (Ind-Ra) raised India's FY2025–26 GDP growth projection to 7% year-on-year — an upward revision of 70 basis points from the 6.3% projected in July 2025. The revision was driven by: (i) milder impact of US tariff hikes on global growth than initially feared; (ii) GST rationalisation boosting consumption; and (iii) faster-than-expected decline in inflation, which increased real wage rates particularly in rural areas. Ind-Ra projected Q2 FY26 GDP growth at 7.2%, with Private Final Consumption Expenditure (PFCE) expected to grow at 7.4% in FY26 (up from 6.9% in the July forecast). Rural demand recovery — aided by normal monsoon, improved agricultural output, and lower food inflation — was identified as a key growth engine. India's GDP growth of 7% would make it the world's fastest-growing major economy in FY26, ahead of China's projected 4.5–5%. This forecast aligns broadly with IMF, World Bank and RBI projections of 6.5–7% for India. The strong growth outlook reinforces India's position as a preferred destination for global manufacturing and investment under the 'China+1' strategy.
Key facts
- India Ratings raised India's FY26 GDP growth projection to 7% from 6.3% in July 2025.
- Key drivers include milder US tariff impact, GST rationalisation, and declining inflation.
- MoSPI's later First Advance Estimates placed real PFCE growth at 7.0% in FY26.
- Rural demand recovery aided by normal monsoon and improved agricultural output.
- India at 7% GDP growth would be the world's fastest-growing major economy in FY26.
- The forecast aligns with IMF, World Bank, and RBI projections of 6.5-7% for India.
6-axis classification
Appears in these topics
Practice MCQ from this story
SolveTap an option below. Correct or incorrect feedback appears instantly.
In which year did India Ratings and Research revise India's FY26 GDP growth forecast upward to 7%, citing GST rationalisation and stronger growth momentum?
India Ratings and Research revised India's FY2025-26 GDP growth projection upward to 7% in 2025, from its earlier July 2025 estimate. The revision was linked to stronger-than-expected growth momentum, consumption support and the expected impact of GST rationalisation.
Source: Business Standard / News9Live / Deccan Chronicle / DD News / PIB
Frequently asked questions
What is India Ratings and Research (Ind-Ra) and what GDP growth did it project for India in FY26?
India Ratings and Research (Ind-Ra) is a domestic credit rating and research agency. It revised India's FY2025–26 GDP growth projection upward to 7% year-on-year — an increase of 70 basis points from the 6.3% it had projected in July 2025 — citing milder US tariff impact, GST rationalisation, and falling inflation as key drivers.
What are the three main drivers Ind-Ra cited for revising India's FY26 GDP growth forecast upward to 7%?
Ind-Ra cited three key drivers: (1) milder-than-expected impact of US tariff hikes on global growth, reducing external headwinds for India's exports; (2) GST rationalisation boosting domestic consumption by lowering effective tax burden on goods; and (3) faster-than-expected decline in inflation, which increased real wages especially in rural areas and stimulated rural demand.
What is Private Final Consumption Expenditure (PFCE) and what growth did Ind-Ra project for it in FY26?
PFCE is the total expenditure by households on goods and services and is the largest component of India's GDP (typically 55–60% of GDP). Ind-Ra projected PFCE to grow at 7.4% in FY26, reflecting the boost from lower inflation, GST rationalisation, and rural demand recovery driven by a normal monsoon and improved agricultural output.
How does Ind-Ra's 7% FY26 GDP forecast compare to projections by international institutions?
Ind-Ra's 7% forecast broadly aligns with projections from the IMF, World Bank, and RBI, which projected India's GDP growth in the 6.5–7% range for FY26. At 7%, India would be the world's fastest-growing major economy in FY26, maintaining its position as a bright spot in an otherwise slowing global economy.
What is a basis point and what does a 70 basis point upward revision in India's GDP forecast signify?
A basis point (bp) is one-hundredth of a percentage point (0.01%). A 70 basis point revision means the GDP forecast was raised by 0.70 percentage points — from 6.3% to 7.0%. Such an upward revision is significant because it represents improved economic fundamentals: better consumption, investment confidence, and reduced external risks, and is closely watched by financial markets and policymakers as a leading indicator of India's economic health.
Was this useful?
Share corrections or missing exam angles with the editorial team.
Send feedback