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India is projected to maintain a steady 6-6.5 per cent year-on-year real GDP growth in FY26, supported by resilient domestic demand and potential relief from softer global crude oil prices, despite pressures from recent tariff hikes, according to a UBS report.
The Report believes India is less vulnerable to global trade shocks compared to more export-reliant Asian economies, owing to its lower goods trade exposure and a strong services export base, which now accounts for about 47 per cent of total exports. The policy focus is expected to remain on enhancing monetary transmission, following a cumulative 100 bps repo rate cut so far this calendar year. The report's analysts added that there may be room for an additional 25-50 bps of easing if inflation remains low and external risks dampen growth momentum. The fiscal drag is also expected to ease, with the central government likely to accelerate its capital expenditure targets. A reduction in retail diesel and petrol prices ahead of Diwali and the Bihar state elections in October-November could further boost household disposable income, providing additional support to consumption, the report added. India's economy grew by 7.4 per cent in the January-March quarter (Q4) of FY25, beating expectations and marking the strongest quarterly growth of the fiscal year. This was a sharp rise from the 6.2 per cent recorded in the previous quarter. Several experts have stated that the robust GDP numbers of the Indian economy in the fourth quarter of fiscal year 2025 are attributed to strong domestic consumption, government investment, and a relatively lower dependence on exports. Chief Economic Advisor (CEA) Dr. V. Anantha Nageswaran expressed confidence in the economy's resilience, stating that India's economy is in good shape despite the challenging global environment. India is poised to lead the global economy again, with the International Monetary Fund (IMF) projecting it to remain the fastest-growing major economy over the next two years. According to the April 2025 edition of the IMF's World Economic Outlook, India's economy is expected to grow by 6.2 per cent in 2025 and 6.3 per cent in 2026, maintaining a solid lead over global and regional peers. (ANI)
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