India's GDP Poised for Strong Growth in FY26, Likely to Exceed 7%
New Delhi, November 28, 2025 – India's economy is projected to grow at a rate of 7% or higher in the financial year 2025-26 (FY26), according to Chief Economic Advisor (CEA) V. Anantha Nageswaran. This optimistic forecast follows a robust economic performance in the first two quarters of the fiscal year, with the second quarter (July-September) registering a six-quarter high growth of 8.2%. The CEA's statement signals an upgrade from the Economic Survey 2024-25, which had projected a growth range of 6.3% to 6.8% for FY26.
Nageswaran highlighted the Indian economy's dynamism, attributing it to the cumulative positive impact of investments in physical and digital infrastructure over the past decade, the resilience of exporters to tariff shocks, and effective policy actions implemented since June 2024. He anticipates that this growth trajectory will propel India's Gross Domestic Product (GDP) past the $4 trillion mark in FY26. The size of the Indian economy was $3.9 trillion in FY25.
The robust GDP growth in the second quarter of FY26 was driven by strong performance in the manufacturing and services sectors. Real GDP for the quarter stood at ₹48.63 lakh crore, compared to ₹44.94 lakh crore in the same period last year. Nominal GDP rose by 8.7% to ₹85.25 lakh crore. The primary sector experienced moderate growth, while the secondary and tertiary sectors exhibited sustained expansion.
Several organizations have echoed this positive sentiment. The International Monetary Fund (IMF) projects India's economic growth at 6.6% for FY26. India Ratings and Research (Ind-Ra) has also revised its FY26 GDP growth forecast upward to 7%.
Despite the positive outlook, CEA Nageswaran cautioned that risks predominantly stem from the global arena and require careful monitoring. Geopolitical uncertainties could cast a shadow on significant cross-border capital flows and domestic investment. The CEA also noted a negative residual impact from higher tariffs imposed by the United States, reflected in a merchandise export growth rate of minus 11.8%.
The government's focus on structural reforms, including the implementation of Labour Codes, GST rate rationalization, the new personal income tax regime, and deregulation initiatives, is expected to enhance the efficiency and competitiveness of the Indian economy. The cumulative GST collection growth of 9% for April-October 2025 indicates a resilient underlying revenue stream, supported by firm consumption and improved compliance.
The government, along with the Reserve Bank of India (RBI), is committed to strengthening India's trade ecosystem through various schemes and relief measures. These include extensions in the time period for the realization and repatriation of the full export value of goods, software, and services.
India's strong GDP growth in the first half of FY26, coupled with positive projections for the remainder of the year, reinforces its position as one of the world's fastest-growing major economies. The government's pro-growth policies, ongoing reforms, and a resilient domestic market are expected to drive sustained economic momentum in the coming years.
