New Delhi, Sep 29 Global rating agency Crisil on Monday projected India’s gross domestic product (GDP) to grow 6.5 per cent this fiscal, amid rising private consumption and tax reforms.
Rising private consumption should support industrial production.
“So far, a copious monsoon, robust kharif sowing and benign inflation have supported the rural economy. The impact of excess rains on agriculture output will be monitorable. The urban economy will get a leg-up from lower lending rates, income tax relief and the rationalisation of the goods and services tax (GST),” said Crisil.
Repo rate cuts by the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), will help lower interest rates in the economy.
The 100 basis points (bps) of cuts made in calendar year 2025 have already softened bank lending rates, but transmission is still ongoing.
“The staggered CRR cut of 100 basis points also came into effect with a 25 bps cut in September and three more cuts ahead which will infuse liquidity in the coming months. We expect another repo rate cut this fiscal,” the report mentioned.
The GST relief should benefit consumption but will be a function of the extent of passthrough.
“However, a slowing world means softer exports, and the tariffs imposed by the US add to that drag. The impact of 50 per cent US tariffs on India will show up from September. A trade deal with the US, being negotiated at present, can offset some of this impact,” it added.
An above-average south-west monsoon will support rural incomes and help reduce food inflation.
Lower inflation should give discretionary spending a leg up. As on September 27, all-India rainfall stood at 108 per cent of its long period average.
However, the impact of excess rains on agriculture output this season will bear watching, said the report.
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