India’s Economic Growth Projection 6.8-7.2% for FY 2026-27
India's economic growth is projected to be between 6.8 and 7.2 percent in the next fiscal year. This indicates that despite trade risks and global uncertainties, India will remain the fastest-growing major economy in the world, according to the Economic Survey presented in Parliament on 29 January.
However, this projection is slightly lower than the current fiscal year’s estimate of 7.4 percent, mainly due to a decline in consumption and investment. The 2025-26 review highlighted that recent policy reforms have increased the economy's medium-term growth potential from 6.5-6.8 percent to nearly 7 percent.
The survey emphasized that global uncertainties require caution, but there is no need for pessimism. The current year’s GDP growth estimate of 7.4 percent is higher than last year’s 6.3-6.8 percent forecast. Despite trade tensions with the United States, India continues to maintain the fastest growth rate globally.
India has not yet signed a trade agreement with the US, which imposed a 50% tariff on Indian exports. To counteract tariffs affecting labor-intensive sectors, the government has initiated policy and tax reforms, including GST rate reductions, income tax threshold increases, labor law amendments, and four new free trade agreements from May 2025, including a major one with the European Union.
Despite low inflation, stronger corporate and household balance sheets, and robust consumption demand, the Indian rupee depreciated nearly 5% last year due to US tariffs. The survey noted that while the rupee undervalues India’s economic strength, the depreciation partially offsets the impact of tariffs on Indian goods.
The IMF projects growth of 6.2 percent if high tariffs persist. Chief Economic Advisor V. Anantha Nageswaran stated that ongoing trade talks with the US are expected to conclude this year, potentially reducing external uncertainty. The survey recommended strategies for domestic resilience, including a focus on "Atmanirbhar Bharat" (self-reliance) given export controls and technology restrictions by developed countries.
The survey also called for a national strategy to reduce raw material costs. Revenue collection in FY 2025-26 remained strong for both direct and indirect taxes, particularly non-corporate taxes, reflecting administrative reforms and the success of future tax measures. The importance of the new income tax law, effective from 1 April, was highlighted to simplify compliance and encourage voluntary adherence.
Prior to Finance Minister Nirmala Sitharaman’s FY 2026-27 budget on 1 February, the survey highlighted shortcomings in export policies in the agriculture sector. India, the world's second-largest agricultural producer by value, could reach $100 billion in agricultural, marine, and food & beverage exports within four years. Frequent policy changes, however, may disrupt supply chains and push foreign buyers to alternative sources.
The survey recommended measures to reduce capital costs, diversify financing beyond banks, and reduce taxes on loan products. To tackle digital addiction, it suggested age-based access restrictions for social media apps, reduced reliance on online learning tools post-COVID, and promotion of offline educational activities with basic phones and study-only tablets for children.
The report also advocated restricting marketing of ultra-processed foods (UPF) from 6 AM to 11 PM, banning marketing of milk and beverages for infants and young children, and supporting policy reforms for gig workers in companies like Swiggy and Zomato. It further suggested amendments to the RTI Act to allow exemptions for confidential reports.