India is heading into 2026 with a rare mix of policy support and economic momentum, even as global conditions remain uncertain.
Two major reports released this week, one from Standard Chartered and another from Invesco, paint a picture of steady growth powered by domestic demand, easier financial conditions, and ongoing reforms.
Easier policy, lower inflation boost outlook
Standard Chartered’s Outlook 2026: Ride the Recovery Wave argues that India’s economy is well positioned to absorb external shocks such as slower global growth and higher US trade tariffs. According to the bank, frontloaded action by the Reserve Bank of India has already eased pressure on households and businesses.
Repo rate cuts totaling 125 basis points, liquidity injections of about ₹10 trillion ($120 billion), and dollar-rupee swaps worth $16 billion have helped loosen financial conditions. On the fiscal side, income tax cuts and GST rate rationalisation, together equal to roughly 1% of GDP, are expected to push consumption higher and support a broader recovery.
Inflation trends add to that confidence. Consumer price inflation averaged 2.3% in 2025, sharply lower than 4.9% a year earlier, and well below the RBI’s medium-term target of 4%. Lower food prices, stable crude oil costs, and GST-related price reductions have all played a role. With GDP growth reaching 8.0% in the first half of 2025–26, the bank expects momentum to widen further next year.
Growth story continues, stocks less certain
Invesco’s 2026 Annual Investment Outlook: Resilience and Rebalancing reaches a similar conclusion on growth, while offering a more cautious market view. The firm expects India to remain the world’s fastest-growing large economy, helped by RBI rate cuts and gradual progress on domestic reforms. Improved US-India relations are also seen as a stabilising influence.
Equity markets, however, may tell a more mixed story. Invesco warns that while emerging markets look attractively valued overall, Indian stocks could lag China in the near term. Globally, lower US interest rates, higher fiscal spending in Europe, Japan and China, and a softer dollar are expected to lift non-US assets and broaden market leadership beyond expensive US technology giants.
