India’s Financial Year Closing Calls – Asia Law Portal

India witnessed another financial year end with stable economic outlook mentioned in recent reports by global financial institutions. There are several key factors to be considered which help to maintain a strong position including long term focused planning approach. This economic progress can be boosted significantly with an effective alternate dispute resolution mechanisms like arbitration and mediation.

Fitch Ratings – Fitch Ratings recently kept its economic forecast for India unchanged, projecting a growth rate of 6.5 per cent for FY25-26, but updated FY26-27 growth rate at 6.3 per cent, up from 6.2 per cent in December, amid challenges posed by a global trade war instigated by the US. “We expect overall GDP growth of 6.5 percent in FY25-26 and a slight slowdown in growth in FY26-27, to 6.3 percent. These forecasts are little changed from the December GEO (which was covered by Asia Law Portal here). More aggressive-than-expected US trade policies are an important risk to our forecast, though India is somewhat insulated given its low reliance on external demand,” the report states. Moreover, the agency forecasts two additional cuts in the policy rate within this calendar year, expecting the policy rate to settle at 5.75 percent by December 2025, down from the current 6.25 percent following a 25 basis point cut in February policy. The report also said that business confidence remains robust, with lending surveys indicating continued double-digit growth in bank lending to the private sector. Furthermore, the Union Budget’s allocation for sustained high levels of public capital expenditure is expected to have a broadly neutral impact on growth.

Moody’s Ratings – India’s real Gross Domestic Product (GDP) growth is projected to exceed 6.5% in the fiscal year ending March 2026, said Moody’s Ratings in its latest Banking System Outlook – India report, released recently. The agency attributed this growth to increased government capital expenditure, tax cuts, and interest rate reductions. Moody’s report highlighted that India’s economy is set to recover from a cyclical slowdown. The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, introduced significant tax relief under the new tax regime, exempting income up to Rs 12 lakh from taxation. The measures are expected to boost consumption and contribute to overall economic expansion. “India’s economic growth will pick up from a cyclical slowdown,” the report noted. Government spending and monetary easing are anticipated to support GDP growth, with Moody’s forecasting real GDP expansion of over 6.5% in FY26, up from 6.3% in FY25. The finance ministry’s Economic Survey has projected GDP growth in the 6.3%-6.8% range for the next fiscal, while official estimates indicate 6.5% growth for the current year.

The Organisation for Economic Co-operation and Development (OECD) – The OECD recently released its Economic Outlook, Interim Report titled ‘Steering through Uncertainty’. The reported stated that the global economy remained resilient in 2024, expanding at a solid annualised pace of 3.2% through the second half of the year. However, recent activity indicators point to a softening of global growth prospects. Business and consumer sentiment have weakened in some countries. Inflationary pressures continue to linger in many economies. At the same time, policy uncertainty has been high and significant risks remain. Further fragmentation of the global economy is a key concern. Higher-than-expected inflation would prompt more restrictive monetary policy and could give rise to disruptive repricing in financial markets. On the upside, agreements that lower tariffs from current levels could result in stronger growth. The report mentioned that in India, GDP growth is projected to be 6.4% in FY 2024-25 and 6.6% in FY 2025-26.