Finance Minister Nirmala Sitharaman. file photo
India GDP growth forecast 2026: Despite global uncertainties, India’s economy is expected to grow by 6.5 percent in fiscal year 2026 on the back of strong domestic consumption and investment demand. Finance Minister Nirmala Sitharaman gave this information to the International Monetary and Financial Committee (IMFC) last week. He said this amidst the reduction in India’s growth estimates by international agencies.
Sitharaman said in a written statement submitted to the International Monetary Fund (IMF) advisory body in Washington that India’s inflation is likely to remain stable at around 4 percent in fiscal year 2026 due to the fall in crude oil prices. She returned to India prematurely due to the Pahalgam terror attack. The Finance Minister said, ‘Looking ahead, India’s growth pace is expected to remain stable despite all the turmoil because its basic drivers – consumption and investment demand – are domestic. On the external front too, services exports are expected to remain strong. Apart from this, softening of crude oil is good news from the point of view of inflation. Therefore, real GDP growth in 2025-26 is expected to be 6.5 percent and inflation is expected to be 4 percent.
The latest economic review also estimated that India’s GDP growth rate in fiscal year 2026 would be in the range of 6.3 to 6.8 percent. But last week, the IMF had reduced its growth forecast for India by 30 basis points to 6.2 percent for the financial year 2026, citing global uncertainty and economic weakness. The World Bank has also reduced its growth forecast for India by 40 basis points to 6.3 percent.
Sitharaman said that the tax relief given in the Union Budget for FY 2026 will also boost private consumption and give impetus to private investment. He said, ‘The pace of investment activities is already visible. Maintaining high capacity utilization, the government’s emphasis on infrastructure spending, strong balance sheets of banks and corporates, and financial ease will also give impetus to the recovery.
The Finance Minister said that due to sufficient water available in the reservoir and tremendous yield, there are chances of strong growth in the agriculture sector during the financial year 2026.
Sitharaman said net services and remittance receipts are expected to remain in surplus. This will partially compensate for the trade deficit during the current financial year. He said, ‘The current account deficit for financial years 2024-25 and 2025-26 is expected to remain within the stable level. Gross foreign direct investment (FDI) is expected to remain strong during April to January 2024-25. This reflects India’s strong macroeconomic fundamentals.
Regarding low fluctuations in the rupee among the currencies of major economies, the Finance Minister said that India’s external sector will remain strong. He said that the global economy continues to face increasing economic uncertainty and downside risks. Used to be.
First Published – April 28, 2025 | 10:20 PM IST
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