India to lead economic growth among G-20 nations

 India’s economy is expected to grow at 6.5% in the 2025-26 fiscal year, retaining its status as the fastest-growing among advanced and emerging G-20 nations, reveals a recent report by Moody’s Ratings. The global credit rating agency highlights tax reforms and ongoing monetary easing as key drivers of this growth.

India’s economy is expected to grow by 6.5% this financial year, the highest among advanced and emerging G-20 nations, driven by tax reforms and monetary easing, according to Moody’s Ratings. As per the report, despite global economic uncertainty and US tariff threats, large emerging markets like India and Brazil are well positioned to attract capital due to their robust domestic economies, deep capital markets, moderate policy credibility, and significant foreign exchange reserves.

The Moody’s report noted, “India has a low external vulnerability indicator (EVI) of 61%, indicating its relatively lower susceptibility to external financial shocks. This is supported by its relatively modest external debt to GDP ratio of 19% and low export dependency on the US (about 2% of GDP).”

India’s tax changes, particularly the increase in the income tax exemption limit from ₹7 lakh to ₹12 lakh, will leave ₹1 lakh crore in taxpayers’ hands, boosting consumption. Additionally, the Reserve Bank of India (RBI) cut interest rates by 25 basis points to 6.25% in February, with further reductions expected to support growth.

The report pointed out that while global emerging market growth is expected to slow in 2025-26, India is well-equipped to sustain its momentum. It noted that domestically driven economies like India and Brazil are more resilient to financial pressures, whereas smaller, export-reliant economies face higher risks from investor sentiment shifts and currency fluctuations. Moody’s predicts that economic activity in fast-growing economies will slow slightly but remain strong.