NEW DELHI — Economists on Wednesday welcomed the government’s first advance estimate projecting real gross domestic product growth of 7.4 percent for fiscal year 2025–26, saying a potential bilateral trade agreement with the United States could further lift investment sentiment and remains a critical factor to watch.
Analysts said the Indian economy continues to show resilience, supported by strong festive demand and a steady improvement in overall economic activity. Robust festival-season sales, along with the expected rollout of GST rationalization 2.0 and income tax cuts, are likely to provide a boost to consumption in the coming months.
An uptick in demand is already visible in several high-frequency indicators, including automobile sales, according to economists. In addition, trade agreements with countries such as the United Kingdom, Oman and New Zealand are expected to provide further support to growth, said Bank of Baroda economist Jahnavi Prabhakar.
At the same time, economists cautioned that downside risks remain due to global headwinds, particularly geopolitical tensions and the potential impact of trade tariffs.
“Investment and consumption continue to remain critical factors supporting growth in the coming months,” Prabhakar said, adding that attention will also turn to the upcoming Union Budget, corporate performance in the third and fourth quarters, and the Reserve Bank of India’s interest rate decisions.
She said real GDP growth in fiscal year 2026–27 is expected to be in the range of 7.0 to 7.5 percent, compared with an estimated 7.4 to 7.6 percent in fiscal year 2025–26.
PHD Chamber of Commerce and Industry President Rajeev Juneja said economic growth above 7 percent is being supported by sustained government spending and rising industry investment. He noted that government final consumption expenditure is estimated to grow 5.2 percent year over year, while gross fixed capital formation is projected to rise 7.8 percent in fiscal year 2025–26.
PHDCCI Chief Executive Officer and Secretary General Dr. Ranjeet Mehta said the government’s continued focus on strengthening supply chain resilience, advancing structural reforms and scaling up infrastructure development is expected to further reinforce India’s growth trajectory.
“These measures, combined with a strong macroeconomic framework and rising private investment, will accelerate India’s development momentum and position the economy for sustained and resilient growth,” Mehta said.
ICRA Senior Economist Rahul Agrawal said growth in the industrial and agricultural sectors is likely to perform somewhat better than the National Statistical Office’s estimate for the second half of fiscal year 2026, while services growth may lag behind.
Agrawal added that ICRA does not expect a fiscal slippage beyond the targeted 4.4 percent of GDP, noting that higher-than-budgeted non-tax revenues and likely expenditure savings should help offset any shortfall in tax collections. (Source: IANS)
