Indian Economy Set to Outpace Expectations with 6.7% Growth Forecast for 2025-26 Fiscal Year
The Indian economy is projected to grow at a faster pace than previously anticipated during the current fiscal year, reflecting robust economic fundamentals and positive market sentiment. According to a recent Reuters survey conducted among economists, India’s gross domestic product (GDP) is forecasted to expand by an average of 6.7% in 2025-26. This upward revision marks the second consecutive monthly increase in growth estimates, following a surprisingly strong 7.8% GDP growth in the first quarter (April to June).
This encouraging outlook builds on multiple factors, including the government’s strategic reduction in the Goods and Services Tax (GST) during the festive season aimed at boosting consumer spending, as well as sustained domestic demand and investment. The survey, which gathered insights from over 40 economists between October 15 and 24, highlights continued optimism about the country’s economic trajectory despite external headwinds.
Growth Amidst Global Challenges and Trade Tensions
While Indian exporters face ongoing challenges due to the high 50% tariff imposed by the United States on certain goods, recent diplomatic discussions between Washington and New Delhi have raised hopes for potential tariff relief, which could further support trade and economic expansion.
The latest median forecast of 6.7% surpasses the 6.6% growth estimate from the previous month’s Reuters poll and is a notable increase from the 6.3% forecast issued in August before the strong first-quarter figures were released. This performance underscores India’s position as one of the fastest-growing major economies globally, even as global economic conditions display signs of uncertainty.
Monetary Policy Outlook and Economic Stability
Despite the positive growth forecast, the Reserve Bank of India (RBI) is expected to cautiously manage monetary policy in the coming months. Approximately 68% of the economists surveyed anticipate a 25 basis point repo rate cut in December, following a recent decision to hold rates at 5.50%. This expected easing of interest rates aims to further fuel economic growth while managing inflationary pressures.
Underlying Growth Drivers
India’s growth momentum is supported by strong domestic consumption, especially rural and urban spending, an upswing in private investment, and persistent public sector infrastructure development. Businesses are expanding productive capacity, operating near full utilization levels, and benefiting from relatively stable borrowing conditions.
Looking Ahead
This survey’s results and the broader economic data reflect India’s resilience amid a complex global environment marked by trade challenges and geopolitical uncertainties. As the country approaches the second half of the fiscal year, economists remain cautiously optimistic about maintaining momentum, supported by policy measures aimed at sustaining demand and investment.
