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CRISIL Projects India's GDP Growth at 6.5% in FY26 and Current Account Deficit (CAD) to Widen to 1.3%.

Economy Business | Dated: 05 Feb 2025

According to the latest report by CRISIL Ratings Limited (formerly Credit Rating and Information Services of India Limited), India's Gross Domestic Product (GDP) is projected to grow by 6.5% in the Financial Year 2025-26 (FY26), slightly higher than the 6.4% growth estimated for the current financial year (FY25).

🎯 Key Highlights:

  • - The report highlights that while government spending will continue to drive India's economic growth, the overall fiscal stimulus will reduce as fiscal consolidation advances. Private sector investments need to gain momentum to further support economic expansion.
  • - India's Consumer Price Index (CPI) inflation is projected to decline from 4.7% in FY25 to 4.4% in FY26, driven by expectations of a normal monsoon, a high base effect in food inflation, and softer international commodity prices. However, non-food inflation may see a slight rise due to adverse base effects.
  • - The fiscal deficit, which was 5.6% of GDP in FY24, is expected to decrease to 4.8% in FY25 and further to 4.4% in FY26. This reduction will be achieved through controlled revenue spending while maintaining a strong focus on capital expenditure.

💡 Other Important Facts:

  • (i) India's Current Account Deficit (CAD) is projected to widen from 1.0% of GDP in FY25 to 1.3% in FY26 due to global trade challenges, but strong services trade balance, steady remittances, and lower crude oil prices will help mitigate any sharp increases.
  • (ii) The Indian Rupee (INR) is expected to depreciate gradually, averaging Rs 86 per USD in FY25 and Rs 87 per USD in FY26. Geopolitical uncertainties may contribute to fluctuations in currency markets.
  • (iii) CAD, also known as the trade deficit, occurs when a country's total imports exceed its total exports. It is measured as a percentage of GDP and serves as a key indicator of a nation's external economic health.

📚 Test Your Knowledge:

According to a recent CRISIL report, what is India's projected GDP growth for FY26?

Correct Answer: 6.5%

🚀 Quick Recap:

About CRISIL Ratings Limited

  • MD : Subodh Rai
  • Headquarter : Mumbai