RBI Rate Cuts & Fiscal Measures Likely To Boost Domestic Demand: Standard Chartered

New Delhi, Dec 26 (KNN) India’s economic growth is expected to remain robust into 2026, supported by a combination of monetary and fiscal measures, according to a report by Standard Chartered. 

The report, titled ‘Outlook 2026: Ride the Recovery Wave’, said frontloaded policy rate cuts and liquidity injections by the Reserve Bank of India (RBI), alongside fiscal initiatives such as income tax cuts and GST rate rationalisation, are likely to underpin a revival in domestic demand.

Standard Chartered said these measures are expected to offset the negative impact of higher US trade tariffs and a slowdown in global growth, while India’s medium-term outlook continues to benefit from earlier structural policy actions.

Inflation Seen Below Target

The report projected that Consumer Price Index (CPI)-based inflation is likely to trend below the RBI’s medium-term target of 4 per cent. It attributed this to modest crude oil prices, easing food inflation and lower consumer prices following GST rate cuts, reported ANI.

The report said, "In our assessment, policy remains supportive of growth in 2026 amid a slew of policy measures taken by the RBI (125 bps repo rate cuts, Rs 10 trillion of liquidity injection and dollar-rupee swaps of USD 16 billion) and the Government (income tax cuts and GST rate rationalisation 1 per cent of GDP)."

Consumption-Led Recovery Expected

Standard Chartered said the combined impact of these measures could trigger a decisive upward shift in growth expectations through a consumption-led recovery, with potential positive surprises in growth data over the coming months. 

However, it flagged elevated trade tariffs, global trade disruptions and a delayed recovery as key risks to the macroeconomic outlook.

Growth and Inflation Trends

Economic activity in India was mixed in 2025, the report noted. Real GDP growth was strong at 8.0 per cent in the first half of 2025–26, compared with 6.4 per cent in 2024–25. 

The bank expects growth to become more broad-based in 2026.

(KNN Bureau)