India is set to become the world’s fourth-largest economy.
Dinodia Photo | Corbis Documentary | Getty Images
Amid rising global trade uncertainties, India’s economy is projected to grow 7.4% in the fiscal year ending March 2026, higher than 6.5% in the last fiscal year, according to first advance estimates released by the Indian government on Wednesday.
In 2025, the advance estimates offered the first official sign of a slowdown in the world’s fastest-growing economy, pegging India’s growth at 6.4%, the weakest since the pandemic. This figure was later revised to 6.5% in May.
Private consumption is expected to expand by 7%, down slightly from the previous year’s growth of 7.2%. Meanwhile, government spending is projected to rise 5.2%, up from a 2.3% increase in the previous year.
Indian exports to the U.S., its biggest trading partner, have been subject to 50% tariffs since August last year. While negotiations toward a trade agreement are ongoing, the prolonged tariffs are expected to weigh on economic momentum.
Last month, the International Monetary Fund said India’s real GDP is projected to grow 6.6% in fiscal 2026 before moderating to 6.2% in fiscal 2027, assuming a prolonged delay in a U.S.-India trade deal.
Despite these risks, the Indian economy has been surprisingly resilient in the first half of fiscal 2026, growing faster than expected at 7.8% in the June quarter and 8.2% in the three months ending September.
India’s central bank last month revised the real GDP growth for fiscal 2026 to 7.3% from the earlier estimate of 6.8%, citing easing price pressures.
The Reserve Bank of India has lowered its consumer price inflation forecast to 2.0%, from 2.6% for this fiscal year. That gave the central bank room to cut its policy rate by 25 basis points to 5.25%, even as it flagged weakness in some key economic indicators.
