Leading ratings agency ICRA, in its latest outlook, has projected that India’s real GDP growth for 2025-26 financial year will exceed 6.5 per cent.
The agency also said the country’s real Gross Value Added (GVA) growth will surpass 6.3 per cent during the same period.
While GDP determines the total value of goods and services produced within the country, GVA is the total value of goods and services produced minus the cost of intermediate goods and services.
Regarding inflation, the Consumer Price Index (CPI) is expected to be above 4.2 per cent, while the Wholesale Price Index (WPI) will be over 2.7 per cent for the current fiscal, the report added.
ICRA forecasts the fiscal deficit to be 4.4 per cent of GDP, with the current account deficit projected at -1 per cent (minus one) during the same period.
According to ICRA, rural demand is likely to remain upbeat, aided by Rabi cash flows and above-normal reservoir levels.
It also said that the combination of the sizeable income tax relief in the Union budget for 2025-26, rate cuts leading to lower EMIs and moderation in food inflation is expected to boost household disposable incomes.
The report also said the tepidness in India's merchandise exports is expected to continue in the near term.
Services exports are likely to outpace merchandise export growth, according to the ICRA outlook.
The Centre's capital expenditure is budgeted to rise by 10.1 per cent in 2025-26, which will boost investment activity, the report added.
However, private capital expenditure may gain some traction on the face of a muted outlook for exports and uncertainty around trade policies, the report added.