India to remain among fastest-growing major economies even as growth may moderate in FY26: EY
India's economic growth is anticipated to slow down in the current fiscal year due to global uncertainties and domestic factors. To maintain growth, a balanced approach to monetary and fiscal policies is crucial. While India remains a fast-growing economy, supported by domestic demand and easing inflation, reviving public investment is essential for sustaining economic activity.
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India's economic growth is expected to moderate in the current fiscal influenced by global and domestic developments and the country may need to rely on a balanced mix of monetary and fiscal policies for sustaining the growth momentum in the near term, an EY report said on Wednesday.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 Statistics 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 30.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 points to 6 per cent.For 2025-26 fiscal, RBI has projected GDP growth at 6.5 per cent.The next meeting of the MPC is scheduled for June 4-6. The monetary policy will be announced on June 6.
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