Summary of this article
India’s economy projected to grow 7.4 per cent 2025-26.
Services, manufacturing, and exports drive strong domestic growth.
Rupee, global trade pressures, and policy influence outlook.
The Indian economy is projected to grow 7.4 per cent in 2025-26, stated the consultancy firm Grant Thornton Bharat. As per the First Advance Estimates released by the National Statistics Office, this is an improvement over the 6.5 per cent growth in the previous fiscal year. Growth is expected to slow a little to around 7 per cent in 2026-27.
Services and manufacturing have been identified as the main drivers of expansion, helping India maintain its status as the world's fastest-growing major economy during the period.
Exports Hold up amid Global Trade Pressures
Rishi Shah, Partner and Economic Advisory Services Leader, Grant Thornton Bharat (Economist, Macro Economic Affairs), in an interaction with PTI, has said that exports are holding up despite US tariffs on Indian imports and other hurdles. Trade performance has contributed to general growth despite the uncertain external conditions.
Geopolitical developments in regions such as South America and the Middle East have been cited as potential pressure points. These developments could have implications for global supply chains and, consequently, for trade and production activity, stated Grant Thornton Bharat.
Industrialisation and Budget Priorities
Policy decisions now taken are expected to have their full economic impact in the medium term. Industrialisation continues to be a key area of focus globally, with advanced economies increasing efforts to rebuild manufacturing capacity.
The upcoming Union Budget is likely to set out the economic priorities of the government, stated Shah. It is considered a directional document that reflects the policy approach for the next few years, with the emphasis on improving the ease of doing business.
Rupee Movement and Monetary Policy Outlook
The rupee is expected to remain around Rs 90 to a US dollar. Currency movements have implications for the cost of imports, especially of essential goods, and also influence the overall trade scenario.
Inflation has been close to 4 per cent, within the range of the Reserve Bank of India's (RBI's) tolerance band of 4-6 per cent, despite volatility in food prices. The central bank began its rate-cutting cycle in February last year and has reduced the repo rate by a cumulative 125 basis points to 5.25 per cent.
The Monetary Policy Committee will take place from February 4 to February 6, 2026, and the interest rates will continue to be one of the central focus areas in the backdrop of the evolving inflation and growth scenario, according to Shah.
Growth Prospects for this Year
Economic growth in the 2025-26 period is expected to continue strongly with the support of domestic demand, steady exports, and continued momentum in services and manufacturing. External developments, currency developments, and policy signals are likely to influence growth conditions in the next fiscal year.
