By Global Consultants Review Team
Global investment bank Goldman Sachs expects India’s economic growth to accelerate in 2026, driven by easing financial conditions, supportive domestic policies, and improving external dynamics.
In its latest report titled “Deregulation Dividend for the Banking System,” Goldman Sachs notes that the country is approaching a more favorable macroeconomic environment. “We expect 2026 to mark an improving growth backdrop on the external front as tariffs settle at lower levels,” the report said. The bank also anticipates another policy rate cut by the Reserve Bank of India (RBI) before the end of the year, which could support credit expansion.
The report highlights key positives, including the simplification of the Goods and Services Tax (GST) regime and the end of peak fiscal consolidation. These changes, alongside regulatory easing and capital relief measures for banks, are expected to foster a gradual recovery in credit demand and strengthen the overall banking system.
However, the outlook isn’t without risks. Goldman Sachs pointed out ongoing external headwinds such as high U.S. tariffs on Indian exports and increased visa costs for Indian IT professionals. These factors could limit corporate borrowing and weigh on sentiment in the near term.
Despite these challenges, the domestic policy landscape appears to be turning more favorable. The RBI’s recent steps are expected to improve liquidity and reduce banks' capital burden, which may stimulate lending. But the pace of credit recovery will largely depend on demand-side strength and global economic conditions.
In its baseline forecast, Goldman Sachs sees 2026 as a year of economic rebound for India, supported by lower tariffs, a more accommodative policy stance, and easing financial constraints across the banking sector.
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