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BUSINESS & TRADE OCTOBER 23, 2026 | The Indian Eye 48

India’s growth outlook

brightens as economy defies

global headwinds

Upgraded forecasts point to resilient demand, investment and services, giving India a stronger

platform for jobs and expansion even as high energy costs and external uncertainty cloud the outlook.

OUR BUREAU
Mumbai/New Delhi
ndia’s economic outlook has improved, with
major international institutions and the Reserve
IBank of India raising their growth projections
for the current financial year. The revisions are wel-
come news as India seeks to sustain expansion and
create jobs. The World Bank now expects India’s
gross domestic product to grow by 7.1% in the 2026–
27 financial year, while the International Monetary
Fund forecasts 7%. The Reserve Bank of India has
also raised its estimate to 7.1%. That strengthens
confidence in the medium term. These estimates
reinforce India’s position among the fastest-growing
major economies.
The upgrades matter because they reflect ac-
tivity that has proved more durable than expected.
Strong domestic demand, robust services and im-
proved manufacturing performance have helped
sustain expansion despite trade uncertainty and
geopolitical tensions. India’s large consumer market The upward revisions are a vote of confidence in India’s economic momentum (ANI file photo)
provides an important buffer: household spending
and business investment can support growth even generates employment at sufficient scale, raises pro- ports and investment flows. The IMF expects global
when demand from overseas markets weakens. ductivity and spreads opportunity across regions and growth of only 3.1% in 2026, well below India’s pro-
Services remain a major strength. Information income groups. India needs more labour-intensive jected pace. India’s domestic market provides resil-
technology, business services, finance, communica- manufacturing, stronger small businesses and better ience, but it cannot fully insulate the economy from
tions and other service industries generate output pathways from education into work. global shocks.
and export earnings. India’s digital infrastructure That is especially important as technology re- The policy challenge is therefore to convert fast-
can help businesses reach customers and operate shapes employment. Artificial intelligence could er growth into durable and inclusive development.
more efficiently. But the opportunity presented by raise productivity and create new markets, but it That means maintaining macroeconomic stability,
artificial intelligence will depend on firms adopting may also disrupt routine work. The gains will de- improving the ease of doing business, investing in in-
new tools, workers gaining relevant skills and regu- pend on training, digital access and support for frastructure and skills, and making it easier for pro-
lation providing clarity. smaller firms, not simply the presence of a large ductive firms to grow. Export competitiveness and
The outlook is encouraging for investment, technology workforce. Investment in health, educa- energy diversification will also matter if India is to
too. Sustained growth can give businesses greater tion and skills will determine whether demographic reduce its exposure to external disruptions.
confidence to expand capacity, while infrastructure advantages become an enduring economic asset. The upward revisions are a vote of confidence in
spending and credit availability can support con- There are also clear risks to the upbeat projec- India’s economic momentum. They suggest that de-
struction, manufacturing and logistics. If private in- tions. India remains heavily dependent on imported mand, services and investment have given the econ-
vestment broadens beyond a handful of sectors, it energy, making it vulnerable to higher crude oil pric- omy a solid base despite an unsettled international
can improve productivity and help India become a es and supply disruptions. Expensive oil can raise environment. But forecasts are not guarantees, and
more attractive alternative in global supply chains. transport and production costs, widen the import growth rates alone cannot measure prosperity.
Stronger growth also gives the government more bill and put pressure on inflation. The Reserve Bank For India, the good news is real: the economy
room to fund public services and infrastructure, pro- has raised its FY27 inflation forecast to 5.2%, under- is expected to expand faster than previously antic-
vided fiscal discipline is maintained. scoring that price stability cannot be taken for grant- ipated, creating opportunities for investment and
For households, however, the benefits of head- ed. Weather risks, including a strong El Niño, could development. The larger achievement will be to en-
line growth are not automatic. A rising GDP figure also affect agriculture, rural demand and food prices. sure that this momentum produces more jobs, rising
does not necessarily translate into better-paying jobs, External conditions are uncertain as well. Slow- household incomes and a broader distribution of
higher real incomes or greater economic security for er global growth, geopolitical conflict, volatile fi- gains. That is what will turn a strong growth forecast
every family. The central test is whether expansion nancial markets and trade barriers could affect ex- into lasting economic progress.

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