NEW DELHI. India’s GDP growth is expected to accelerate to 7.4 per cent in the current fiscal year 2025-26. This is a significant jump from the 6.5 per cent growth recorded in the previous fiscal year. According to the latest report by ICRA Limited, the economy maintains strong momentum. The first half of the year may even see growth touching the 8 per cent mark. However, experts predict a slight moderation to below 7 per cent in the second half.
Driving Factors for India’s GDP growth
Several internal factors are powering this economic surge. A strong festive season and recent GST rate cuts have boosted consumer spending. The report highlights that mining and construction activities are recovering quickly after the monsoon. These sectors will likely drive industrial demand in the coming months. Aditi Nayar, Chief Economist at ICRA, noted that government policy support played a crucial role.
Furthermore, the economy is benefiting from a “Goldilocks period.” This means India is enjoying high growth alongside record-low inflation. Recent income tax reliefs and a 1.25 per cent cut in the repo rate have increased disposable income. Good monsoon rains have also supported the agricultural sector, keeping rural demand healthy. These elements combined have created a very stable environment for domestic businesses.
Navigating Global Challenges and Exports
Despite the strong internal numbers, external challenges remain a concern for the second half of the year. Weak global demand has caused a slowdown in Indian exports. The report warns that this downward trend could put pressure on the overall growth rate. Much depends on the upcoming trade discussions with major partners like the United States. A successful trade agreement could provide the necessary cushion for the export sector.
Additionally, the Reserve Bank of India (RBI) continues to monitor market liquidity closely. Proactive measures to keep cash flowing in the banking system have supported private investment. While global headwinds persist, India’s internal structural reforms act as a strong buffer. Most analysts believe the country will remain the world’s fastest-growing major economy this year.
The outlook for India GDP growth remains broadly positive for the rest of the decade. By balancing fiscal discipline with growth-supportive policies, the government aims for sustainable expansion. As long as domestic consumption remains high, India is well-positioned to meet its 2026 targets.
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