The Indian economy is performing well and is expected to grow up to 6.8 percent in the fiscal year 2025-26, according to Chief Economic Adviser Anantha Nageswaran. Speaking at a virtual press conference following the release of GDP data for FY25 and the January-March 2025 quarter, the CEA emphasised that continued efforts to attract foreign direct investment (FDI), increased private sector capital investment, and rising urban consumption will be key drivers of this growth.

CEA Nageswaran highlighted that given the global economic environment, the Indian economy has shown resilience and steady performance. He mentioned that if these positive trends in FDI and private investment continue, alongside stronger urban spending driven by better capital formation, hiring, and compensation, India can achieve a growth rate near the higher end of the government’s projection range of 6.3 to 6.8 percent for FY26.

GDP Growth Data for FY25

The Indian economy grew by 6.5 percent in real terms during FY25, matching expectations. This figure comes from the second advance estimates of the National Statistical Office (NSO). The Reserve Bank of India (RBI) had also estimated a 6.5 percent growth rate for the same fiscal year.

Looking back, India’s GDP growth was 9.2 percent in FY24, 7.2 percent in FY23, and 8.7 percent in FY22, reflecting a strong recovery phase following the pandemic.

For the January-March quarter of 2025, the economy expanded by 7.4 percent. Quarterly growth rates in 2024 were 6.7 percent (April-June), 5.6 percent (July-September), and 6.2 percent (October-December), showing some fluctuation but overall positive momentum.

Monsoon and Food Inflation Outlook

On the impact of the unusual monsoon onset and its effect on vegetable prices, CEA Nageswaran stated that current indications suggest a good crop yield and sufficient inventory levels. The India Meteorological Department (IMD) forecasts above-normal monsoon rainfall especially in key rain-fed agricultural areas, supported by an early monsoon arrival in several states.

This favourable monsoon outlook is expected to keep food inflation low in the near term. The CEA cited a good rabi harvest, increased summer sowing, healthy government procurement, and an above-normal monsoon as factors contributing to benign food inflation trends.

Global Economic Outlook

CEA Nageswaran pointed out that while global growth is expected to remain slow amid ongoing uncertainties, India is likely to experience smaller cuts in growth forecasts relative to other economies. This resilient outlook is supported by strong domestic demand and policy measures.

Additional Positive Factors

The Indian economy benefits from robust exports and healthy foreign exchange reserves that cover approximately 11 months of imports. Declining crude oil prices are expected to reduce import bills, creating fiscal space for the government and easing external economic pressures.

Outlook for FY26

The government maintains its growth projection for FY26 in the range of 6.3 to 6.8 percent, driven mainly by private consumption, including a rural economic rebound, and growth in services exports. Various agencies forecast growth between 6.3 and 6.7 percent for the upcoming fiscal year.

In summary, the Indian economy is on a positive trajectory with key drivers including FDI, private capital investment, urban spending, and supportive agricultural conditions. While global challenges persist, India’s growth outlook remains robust and promising for FY26.

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