Mumbai,Ā Mar 26: S&P Global Ratings on Tuesday cut India’s GDP growth projections to 6.5 per cent for the next fiscal as it expects that economies in the APAC region will feel the strain of rising US tariffs and pushback on globalisation.In its Economic Outlook for Asia-Pacific (APAC), S&P said despite these external strains, it expects domestic demand momentum to remain solid in most emerging-market economies.
“India’s GDP will grow 6.5 per cent 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 per cent,” S&P said.
The forecast assumes that the upcoming monsoon season will be normal and that commodity- especially crude– prices will be soft.
Cooling food inflation, the 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 credit rating agency expects central banks in the Asia Pacific region to continue cutting benchmark interest rates through this year.
The Reserve Bank of India will cut interest rates by another 75 bp-100 bp in the current cycle, we project. Easing food inflation and lower crude prices will move headline inflation closer to the central bank target of 4 per cent in the fiscal year ending March 2026 and fiscal policy is contained,” S&P said.
Last month, the Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points from 6.50 per cent to 6.25 per cent in its monetary policy review.
S&P said Asia-Pacific economies will feel the strain of rising US tariffs specifically and a pushback on globalisation more generally.
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.
S&P said that the Donald Trump administration in the US is changing economic policy in key areas.