Deloitte projects India’s GDP growth for the financial year 2025–26 at 6.4–6.7%, driven by strong domestic demand, easing inflation, and strategic trade deals with global partners.
Key Drivers of India’s Economic Growth
- Resilient Domestic Demand: India’s stock markets are robust, attracting both domestic and foreign investors.
- Expanding Middle-Class Consumption: Rising disposable incomes contribute to growth in retail and service sectors.
- Skilled Talent Pool: Proficient workforce in technology, manufacturing, and services enhances India’s appeal to global businesses.
Boost from Strategic Trade Negotiations
- UK: Strengthening bilateral cooperation through a strategic trade agreement signed in May.
- US: Negotiations focus on technology transfer, AI collaboration, and digital economy partnerships.
- European Union: Anticipated trade deal by end of 2025 expected to unlock market access and increase investment flows.
Inflation Eases, Demand Strengthens
With inflation under control, strong household spending, urban consumption, and rural demand are expected to drive economic growth.
Government Initiatives
The government’s focus on infrastructure development and investment-friendly reforms boosts private sector confidence.
Risks and Challenges
- Trade Exposure: India needs to monitor trade exposure and geopolitical developments closely.
- Supply Chain Disruptions: Regional conflicts can impact global supply chains.
- Commodity Price Volatility: Global economic uncertainty may lead to fluctuations in commodity prices.
A Balanced Outlook for FY26
Deloitte’s forecast emphasizes the importance of a balance between domestic resilience and external opportunities for India’s growth in the face of global challenges.
Key Takeaways for Competitive Exams
- India’s GDP growth for FY26 is projected at 6.4–6.7% due to strong domestic demand and strategic trade agreements.
- Key drivers include resilient domestic demand, expanding middle-class consumption, and a skilled talent pool.
- Strategic trade negotiations with the UK, US, and EU are expected to boost India’s market presence globally.
- Despite positive outlook, India must monitor trade exposure, supply chain disruptions, and commodity price volatility.
