India’s economy is expected to experience significant growth in the fiscal year 2026, with projections ranging from 6.3% to 6.8%. According to the Bank of Baroda, the economy is likely to grow at a rate of 6.5% in FY26. However, there are potential risks to this growth, particularly with regards to tariff tensions with the US. The government has acknowledged that US tariffs pose a downside risk to India’s economic growth, which could impact the country’s export sector.
Despite these risks, some economists believe that domestic consumption growth can offset losses due to US tariffs. This suggests that India’s economy is becoming increasingly driven by domestic demand, rather than relying solely on exports. This is a positive sign, as it indicates that the economy is diversifying and becoming more resilient to external shocks.
In the quarter ending June, India’s GDP growth reached a 5-quarter high of 7.8%, exceeding expectations. This growth was driven by a combination of factors, including increased government spending, a pickup in private investment, and a strong performance from the services sector. However, despite this positive news, the outlook for India’s economy remains clouded, with many experts cautioning that the growth may not be sustainable in the long term.
The Indian Express noted that while the economy has done better than expected, there are still many challenges that need to be addressed, including a slowdown in the manufacturing sector and a decline in private investment. Additionally, the impact of tariff tensions with the US and other countries could still have a significant impact on India’s export sector, which could in turn affect the overall growth of the economy.
Overall, while India’s economy is expected to experience significant growth in the coming year, there are still many risks and challenges that need to be addressed. The government and policymakers will need to carefully manage these risks and implement policies that support domestic consumption and investment, in order to ensure that the economy continues to grow and thrive. With the right policies and a bit of luck, India’s economy could continue to outperform expectations and achieve its growth potential.