Moody's Forecasts India's GDP Growth at 6.5% for FY26, Highest Among G-20 Nations.
Economy Business
In April 2025, the global credit rating agency, Moody's Ratings, released its latest report on Emerging Markets, projecting India's Gross Domestic Product (GDP) growth at 6.5% for Financial Year 2025-26 (FY26), down from 6.7% in FY25. Despite this slowdown, India will continue to have the highest growth rate among both advanced and emerging Group-20 (G-20) nations.
- This growth projection for India in FY26 is driven by tax measures and continued monetary easing, supporting economic stability and expansion.
- The report also highlighted that while India's growth will remain the highest in the Asia-Pacific region, its deep integration with international trade makes it vulnerable to global uncertainties, including potential economic impacts from United States of America (USA) tariffs.
Main Point :- (i) Moody’s emphasized that large emerging markets like India and Brazil will continue to attract and retain global capital, even in risk-averse conditions. Their economic resilience is attributed to strong, domestically-driven economies, robust capital markets, moderate policy credibility, and substantial Foreign Exchange Reserves (FER).
(ii) India's growth projection is backed by its low External Vulnerability Indicator (EVI) of 61%, indicating reduced susceptibility to external financial shocks. This is further supported by a modest external debt-to-GDP ratio of 19% and minimal dependency on the United States (USA), accounting for just 2% of GDP.
(iii) The report forecasted India's inflation to average 4.5% in FY26, down from 4.9% in FY25. Additionally, the Government of India (GoI) significantly raised the income tax exemption limit from Rs 7 lakh to Rs 12 lakh in the Union Budget for FY26, aiming to boost consumption and economic demand.
About Moody's Ratings
President : Michael West
Headquarters : New York, the United States of America (USA)
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