“With the 25% tariff imposed on Indian exports by the USA and an unknown penalty, uncertainty continues to remain elevated. The GDP growth is expected to slow down to 6.2% in FY26, said C S Rajan, Chairman of Kotak Mahindra Bank.
The more recent high-frequency indicators continue to show softness in activity, which is also reflecting in the slowing credit growth, he added.
The World Bank, in April, cut the FY26 growth forecast from the projected 6.5% to 6.3%, stating that the country needs to step up domestic revenue mobilisation to increase resilience against future shocks.
The government, however, projected India’s economic growth between 6.3% to 6.8% for 2025-26.
“India is projected to be world’s fastest-growing major economy (6.3% to 6.8% in 2025-26),” as stated in a PIB release dated June 16.In 2024–25 alone, nominal GDP grew by 9.9% over the previous year, while real GDP (at constant prices) increased by 6.5%, reflecting sustained economic momentum.Commenting on India’s economy, Rajan said that the country’s economy has displayed resilience during FY25, supported by robust macroeconomic fundamentals and proactive policy measures.
The inflation trends have further turned benign in Q1 of the current financial year, with recent inflation readings dropping to as low as 2.1%, he added.
In this environment of benign inflation and growth slowdown, the Reserve Bank of India has cut the policy repo rate by 100 bps to 5.5% and provided aggressive liquidity measures to spur growth, the Kotak Bank Chairman said.
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