New Delhi, July 31
India’s economic growth is expected to hover around 6.5 per cent in the fiscal year 2025-26, driven by a more accommodative interest rate environment, recent income tax cuts, and a likely uptick in urban demand, according to experts.
PwC partners Ranen Banerjee and Manoranjan Pattanayak noted that with retail inflation likely to stay below the Reserve Bank of India’s projection of 3.7 per cent for FY26, there is room for the central bank to reduce the policy rate by an additional 25 to 50 basis points.
Experts at PwC believe the combination of monetary easing and tax relief will have a delayed but positive impact on the economy, particularly in terms of corporate performance.
Banerjee indicated that second-quarter corporate earnings for FY26 are likely to outperform those in the first quarter due to these supportive factors.
The PwC experts also emphasised the importance of sustained public capital expenditure.
Banerjee stressed that the government would need to maintain its infrastructure investment momentum for the next decade to ensure consistently high economic growth.
On the rural front, Pattanayak pointed to a steady rise in rural wages, which is expected to boost rural consumption and support overall economic activity.
He also noted that an above-normal monsoon would likely benefit the agricultural sector, further bolstering rural demand. However, the outlook for exports remains cautious.