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BUSINESS & TRADE AUGUST 28, 2026 | The Indian Eye 34

How and Why Indian

economy is showing resilience

amid global gloom

India is showing signs of resilience, powered by domestic demand, manufacturing,

government capital expenditure and improving corporate earnings.

OUR BUREAU FY27 began stronger than expected,
with revenues of MSCI India compa-
New Delhi / Mumbai
nies rising 19 per cent year-on-year and
t a time when the global eco- profit after tax increasing 16 per cent.
nomic outlook remains cloud- The strength was not confined to
Aed by geopolitical tensions, large companies. Nifty Midcap 100
commodity price shocks and weak ex- companies, excluding energy, record-
ternal demand, the Indian economy is ed 42 per cent growth in profit after
offering a more positive picture. The tax, while Nifty Smallcap 100 compa-
latest indicators suggest that growth nies registered 39 per cent growth.
is broadening, corporate earnings are This suggests that India’s eco-
improving and domestic demand con- nomic story is becoming increasingly
tinues to provide an important cush- domestic-demand driven. That does
ion against global uncertainty. not make the country immune to
India’s GDP is estimated to grow global shocks, but it gives the econo-
by 7-7.2 per cent in the first quarter my a degree of protection that many
of FY27, compared with 6.8 per cent The Mobile Phone Manufacturing Scheme, with an allocation of Rs 62,500 crore over five more externally dependent econo-
in the same quarter last year, accord- years from FY27 to FY31, is designed not only to expand production but also to promote Indian mies lack.
ing to a Bank of Baroda report. The Companies, however, are not
expected acceleration is significant intellectual property, design and brands (File photo) ignoring the risks. Corporate man-
because it comes against a difficult agements have remained cautious,
external backdrop, including the con- port points to improving government wards greater domestic value addition emphasising profitable expansion,
tinuing West Asia crisis and volatility capex alongside healthy credit and and globally competitive Indian brands. calibrated pricing and margin disci-
in energy and commodity markets. deposit growth as important factors The Mobile Phone Manufac- pline rather than chasing growth at
The growth story is increasing- supporting economic expansion. turing Scheme, with an allocation of any cost. Most companies have re-
ly being driven by sectors that have The picture is not uniformly pos- Rs 62,500 crore over five years from tained their full-year guidance while
a strong connection with domestic itive. Agriculture is expected to grow FY27 to FY31, is designed not only keeping an eye on geopolitical and
investment and consumption. Manu- by only 3.5 per cent in Q1FY27, down to expand production but also to monsoon-related uncertainties.
facturing, electricity and construction from 4.4 per cent a year earlier, with promote Indian intellectual property, But the underlying domestic en-
are expected to outperform their lev- delayed monsoon conditions and ex- design and brands. The government gines appear stronger than they were
els of a year ago, helped by sustained treme heat posing risks. expects cumulative mobile phone in previous periods of global stress.
government capital expenditure and The bigger challenge, however, production to double from around Government investment is support-
healthy growth in the financial sector. comes from outside India’s borders. Rs 20 lakh crore to Rs 40 lakh crore ing infrastructure and manufacturing.
Industrial growth is projected at The continuing West Asia crisis during the scheme period, while em- Credit is growing. Corporate profit-
6.8 per cent, with manufacturing ex- has pushed up prices of key commod- ployment in mobile phone and elec- ability is improving. Services remain
pected to expand 7.8 per cent. Elec- ities. International crude prices rose tronics manufacturing has already strong. Domestic consumption con-
tricity and construction are forecast 44.7 per cent and urea prices 73.5 per crossed 25 lakh. tinues to cushion external weakness.
to grow by 7 per cent and 6 per cent cent during Q1FY27, according to This marks an important shift in The immediate challenge will
respectively. Services, meanwhile, are the Bank of Baroda report. Such in- India’s industrial ambitions. The ob- be to convert this resilience into sus-
expected to expand by 8 per cent, led creases can feed into India’s import jective is no longer simply to make tained, high-quality growth — one
by financial, real estate and profes- bill, inflation and corporate costs. products in India, but increasingly to that creates jobs, raises productivity,
sional services. Yet the manufacturing sector create Indian companies, technolo- strengthens domestic supply chains
This composition of growth is im- has so far demonstrated consider- gies, designs and supply chains capa- and enables Indian companies to
portant. India’s relative strength is not able resilience. The report notes that ble of competing globally. compete globally.
simply the result of one booming sec- manufacturing continues to face un- The financial markets are also re- For now, however, the contrast
tor. It reflects the increasing contribu- certainty and cost pressures but is be- flecting some of this optimism. is striking: while much of the world
tion of manufacturing, infrastructure, ing supported by the capex push and According to JP Morgan, India’s is worrying about slowing growth and
services and domestic investment. steady investment activity. earnings outlook has improved, with rising uncertainty, India enters the
Government capital expenditure Another encouraging sign is the MSCI India earnings growth estimat- second half of 2026 with an economy
remains one of the key pillars of this government’s attempt to move Indian ed at 11 per cent in CY26 and 13 per that continues to show considerable
momentum. The Bank of Baroda re- manufacturing beyond assembly to- cent in CY27. The first quarter of momentum.

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