October 28, 2025
The upward revision follows a 7.8% GDP expansion in April–June, which exceeded expectations
Festive season GST cuts are expected to further boost consumer spending in the second half of the year
A 68% majority of economists predict the RBI will cut interest rates by 25 bps in December, citing easing inflation
US tariffs of 50% on Indian goods remain a headwind, but renewed bilateral dialogue has lifted optimism about reductions
India’s economy is set to grow slightly faster than previously expected this fiscal year, as economists raised their forecasts for a second consecutive month following a surprise 7.8% GDP expansion in the April–June quarter, a Reuters poll showed.
The stronger-than-expected first-quarter performance, combined with a cut in Goods and Services Tax (GST) to stimulate consumer spending ahead of the festive season, prompted most economists surveyed between 15 and 24 October to either revise their growth forecasts upward or maintain previous estimates.
The median forecast of more than 40 economists now pegs full-year growth at 6.7%, slightly higher than 6.6% in last month’s poll and up from 6.3% in August, before the April–June results were released.
Economists noted that the growth outlook could improve further if trade tensions with the United States ease. Although a 50% tariff on Indian goods remains in place, recent statements from Washington and New Delhi have raised hopes of a rollback.
The poll also found that a majority of respondents (34 of 50) expect the Reserve Bank of India (RBI) to cut interest rates by 25 basis points in December, after keeping the repo rate steady at 5.50% earlier this month. This marks a shift from September’s poll, when most analysts had predicted no rate change.
The RBI hinted in October that slowing inflation had created room for policy support to growth. Inflation is expected to average 2.5% this fiscal year, before rising to 4.2% next year, the survey showed.
Median projections suggest rates will remain on hold through at least the first half of 2027 after the anticipated December cut.
“The monetary and fiscal policy support for growth, and the performance of the rural economy have led to our assessment of slightly revising up our GDP growth numbers for the year,” said Sakshi Gupta, Principal Economist at HDFC Bank.
Among those polled, 20 of 21 economists said the economy was more likely to outperform rather than underperform current estimates over the coming year.
Growth is expected to stabilise at 6.5% in the next two fiscal years, suggesting continued momentum beyond FY2025.
However, Abhishek Upadhyay, Senior Economist at ICICI Securities Primary Dealership, cautioned that the “big headwind” remained the higher US tariffs, which had offset some benefits from GST relief. “If that headwind cools, then growth in the second half of the year could even be stronger than we currently expect,” he said.
Despite recent tax relief, economists warned that private investment, a key driver of job creation, remains subdued. Frequent policy shifts from Washington have added uncertainty, making investors hesitant to commit new capital to India.
“Whenever there is uncertainty, the worst-affected segment in the entire GDP spectrum is investment, and it’s happening,” said Kanika Pasricha, Chief Economic Adviser at Union Bank of India. “Once uncertainty fades, we may see private investment come back. GST reform to address demand may take time to show results, given global headwinds are still curbing capital expenditure recovery.”
Source: Reuters