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India's economy is projected to grow between 6.4% and 6.7% in the current financial year, according to the Confederation of Indian Industry (CII). The forecast reflects optimism around strong domestic consumption, a favorable monsoon, increased liquidity from the Reserve Bank of India's recent CRR cut, and a benchmark interest rate reduction. While geopolitical tensions and trade uncertainties remain potential risks, the CII believes these are balanced by positive internal factors. This projection was shared by CII President Rajiv Memani during his first media briefing since assuming the role.
India's economy is likely to clock a growth rate of 6.4% to 6.7% in FY26, according to the Confederation of Indian Industry (CII), buoyed by robust domestic demand and policy support from the Reserve Bank of India. CII President Rajiv Memani shared this outlook during his maiden press conference after taking charge, stating that while global uncertainties remain a concern, the internal economic momentum looks resilient. Advertisement
Memani pointed to a favorable monsoon outlook, which typically boosts agricultural output and rural spending, as a key enabler of consumption-led growth. He also highlighted the significant monetary policy steps recently undertaken by the RBI, which include a 100 basis point reduction in the Cash Reserve Ratio (CRR). This move is expected to inject INR 2.5 lakh crore into the banking system, improving credit flow to productive sectors.
In addition to the CRR cut, the RBI trimmed the benchmark interest rate by 50 basis points to 5.5%, further lowering the cost of borrowing and encouraging capital expenditure and consumer spending. These policy changes are expected to enhance liquidity and stimulate economic activity in key sectors.
Memani explained that while external trade risks and geopolitical uncertainties such as tensions in the Middle East and disruptions in supply chains pose challenges, the CII is optimistic that these will be offset by the strength of India's internal demand and policy buffers. He added that from CII?s perspective, the risks to economic growth appear evenly balanced at this point.
The forecast comes at a time when India has been striving to maintain steady growth despite global economic uncertainties, and follows a previous year where GDP growth was slightly dampened due to international volatility and domestic inflationary pressures. However, with inflation now under relative control and liquidity improving, the industry body believes India is on track to deliver a stable and strong performance in the current fiscal.
Source PTI
5th Jun, 2025
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