According to S&P Global Market Intelligence, India’s domestic demand is expected to remain resilient in 2025, supported by the personal income tax concessions announced in the 2025 Union budget and the Reserve Bank of India’s (RBI) repo rate cut. The RBI had reduced the repo rate by 25 basis points in the February monetary policy meeting, and the government’s decision to introduce no income tax on income up to Rs 12 lakh is expected to boost consumer spending and savings. The additional liquidity-boosting measures by the RBI will also support the domestic economy.
The Indian economy is projected to grow between 6.3% and 6.8% in 2025-26, as per the Economic Survey presented in January. The December quarter GDP results were in line with S&P Global Market Intelligence’s estimates, with the economy growing 6.2% in real terms. The improving rural demand and increased government spending are likely to sustain the momentum in the final quarter of financial year 2024-25, resulting in a full-year growth of 6.4%.
However, the economy faces headwinds, including the US tariff threats, which could turn exports into a drag on growth. Despite this, the favorable inflation outlook is likely to allow the RBI to cut interest rates at least once more in April, although further easing may be constrained by the weakening rupee. Overall, S&P Global Market Intelligence projects real GDP growth to be sustained at 6.4% in 2025-26.