India will remain one of the fastest-growing major economies, supported by resilient domestic demand, easing inflation, and an accommodative monetary policy linked to prospects of revival in private investment, according to the EY Economy Watch May edition.
“India’s economic growth for FY26 is expected to moderate, influenced by a mix of global and domestic developments,” it said.
As per EY report analysis, global factors are largely contributing to a cautious outlook. These include continuing supply chain disruptions, the impact of recent tariff measures by the US, and broader uncertainties in global trade and geopolitical developments.
The report said that in the near term, India may need to rely on a balanced mix of monetary and fiscal policies for sustaining the growth momentum.
“On the monetary front, a continuation of the ongoing rate cut cycle could provide support to consumption and investment. On the fiscal side, reviving the momentum in public investment especially GoI’s capital expenditure, which witnessed a moderation in growth in FY25, will be important to sustain economic activity,” EY said. In February, the National Statistical Office (NSO) had projected the Indian economy to grow at 6.5 per cent in 2024-25, with economic growth in June, September and December quarters at 6.5 per cent, 5.6 per cent and 6.2 per cent, respectively. The NSO is scheduled to release the provisional estimates of FY25 GDP and quarterly estimates for Q4 on May 31.
In April, the RBI’s monetary Policy Committee (MPC), consisting of three central bank members and an equal number of external members, voted unanimously to cut the repurchase or repo rate by 25 basis point to 6 per cent. It had reduced rates by an equal measure in February — the first cut since May 2020.
For 2025-26 fiscal, RBI has projected GDP growth at 6.5 per cent.
The next meeting of the MPC is scheduled for June 6.
