New Delhi: India Economics and Research (Ind-Ra) on Wednesday estimated that the Indian economy will grow at 6.6 per cent in 2025-26, up from 6.4 per cent in the current fiscal.
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Like FY22 and FY24, investment will be a key driver of growth for the Indian economy in FY26 too. The Indian economy has endured a cyclical growth slowdown over the past three years, which is estimated to reverse from the December quarter. GDP growth until FY24 was impacted by post-Covid-19 outputs, in fact base effects impacted daily GDP growth.
June quarter FY25 GDP growth was driven by a combination of strong base effects and normal options due in May 2024, while growth in the July-September period saw the extended impact of weak private sector capital expenditure. India Conditions and Research believes Indian thrifts are facing fiscal, external tightening.
The agency said that although financial conditions are now expected to improve, fiscal and external tightening are projected to continue in FY26 as well.
“However, GDP growth in FY26 is projected to be at par with India’s current decadal growth (FY11-FY20),” said Devendra Kumar Pant, principal economist and head of public finance at India Conditions and Research. However, India Conditions and Research said that if the economy continues to strengthen, tariff wars and capital flight could impact growth and inflation rates. Ind-Ra expects retail inflation to average 4.4 in FY26, up from 4.9 in FY25.
The timing of a rate cut will depend on how the upcoming data calculations for the Union Budget for FY26, the inflation trajectory, and the domestic and global scenario align with the RBI’s flexible inflation targeting approach.
The merchandise trade account deficit is estimated at $308 billion in FY26 ($277.4 billion in FY25, $244.9 billion in FY24).
