Will India's GDP Witness a Growth of 7.5-7.8% in FY26?
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Synopsis
India is on track for a robust GDP growth of 7.5-7.8% in FY26, buoyed by festive demand and strong service sector performance. However, potential challenges loom for FY27 with a projected moderation in growth rates.
Key Takeaways
- Projected GDP growth of 7.5-7.8% in FY26.
- Real GDP grew by 8% in the first half of FY26.
- Policy focus will shift to MSMEs and tier-2 cities.
- Expected conclusion of India-US trade deal.
- Favorable inflation trends and trade recalibrations.
New Delhi, Jan 14 (NationPress) India's GDP is expected to grow between 7.5% and 7.8% in the ongoing fiscal year (FY26), thanks to strong festive demand and vibrant services sector activity, according to a recent report.
The analysis from Deloitte India indicates that this growth may temper to 6.6%–6.9% in FY27 due to a high baseline and persistent global uncertainties.
During the first half of 2025–26 (April–September), the real GDP achieved an impressive 8% growth, demonstrating the economy's resilience amidst trade disruptions, policy changes in developed countries, and fluctuating capital flows.
“India’s resilience is not by chance. It is the result of consistent pro-growth policies,” stated Rumki Majumdar, Economist at Deloitte India. “As demand-side factors are largely addressed, the policy focus in 2026 will transition to supply-side reforms, concentrating on MSMEs and nurturing tier-2 and tier-3 cities as new growth engines,” she added.
Despite the elevated external risks, their full impact may not be felt in FY26. Majumdar also mentioned that the anticipated India-US trade agreement could be finalized by the close of this fiscal year, which is expected to rejuvenate foreign investment and stabilize the currency.
The report highlighted the significant policy actions taken in 2025, such as tax exemptions, cuts in policy rates, and the rationalization of GST, which have effectively boosted domestic demand and supported recovery.
Favorable trends in inflation have further enhanced the economic outlook, while trade readjustments through multiple FTAs have bolstered exports.
The consultancy also pointed out a strategic shift in trade policy, noting India's agreements with the UK, New Zealand, and Oman, the operationalization of the EFTA deal, and the commencement of negotiations with Israel.
“These collaborations open up manufacturing opportunities and extend India’s services reach beyond the US, while strengthening investor trust and paving the way for increased FDI, which is vital for supporting infrastructure and industrial growth,” Majumdar stated.
Another recent analysis from a fund house reported an 8.2% GDP growth in Q2FY26, highlighting a significant rebound in industrial output and stable GST collections as positive indicators of domestic fundamentals.
Lower crude prices, declining global interest rates, and policy support through tax and GST reductions are expected to further stimulate consumption and investment, according to the fund house's forecast.
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Point of View
I recognize that India's projected GDP growth showcases the resilience of our economy, driven by strategic policy decisions and robust domestic demand. It's a crucial moment for our nation, and understanding these dynamics will help us navigate future challenges and opportunities.
NationPress
14/01/2026
Frequently Asked Questions
What is the projected GDP growth for India in FY26?
India's GDP is projected to grow between 7.5% and 7.8% in FY26.
What factors are driving this growth?
The growth is primarily driven by strong festive demand and robust activity in the services sector.
How might external risks impact India's GDP?
While external risks remain high, their complete impact may not be felt in FY26, although growth is expected to moderate in FY27.
What role do policy changes play in this growth?
Decisive policy moves, including tax exemptions and GST rationalization, have bolstered domestic demand and supported recovery.
What is the significance of India-US trade agreement?
The India-US trade deal, likely to conclude soon, could enhance foreign investment and stabilize the currency.
