India’s economy is projected to achieve a real GDP growth of 7.4% in FY26, according to the Economic Survey 2025-26, making the country the fastest-growing major economy for the fourth year in a row. This growth is fueled by a “double engine” of strong domestic consumption and rising investments. Private final consumption expenditure now accounts for 61.5% of GDP, reflecting robust domestic demand supported by low inflation, job creation, and increasing purchasing power.
Investment activity has surged, with gross fixed capital formation reaching 30% of GDP and investment growth at 7.6% during the first half of FY26, surpassing pre-pandemic levels. The agricultural and allied sectors are expected to expand by 3.1%, contributing to rural demand, while the industrial segment gains momentum, with manufacturing growing 8.4% in H1 FY26. The services sector also showed strong performance, with Gross Value Added (GVA) rising 9.3%, reflecting broad-based and balanced growth across the economy.
Exports, covering merchandise and services, reached a record US$ 825.3 billion in FY25, demonstrating resilience despite global uncertainties. Inflation has moderated significantly, with headline CPI falling to 1.7% between April and December FY26, supported by favorable supply conditions and lower food prices. Fiscal policy remained prudent, aided by strong tax revenues and controlled expenditure. Non-performing assets in banks dropped to 2.2%, indicating enhanced financial stability, while foreign exchange reserves comfortably cover over 11 months of imports, alongside a small current account deficit of 0.8% of GDP in H1 FY26.
Looking ahead, the Economic Survey projects real GDP growth between 6.8% and 7.2% in FY27. The momentum is expected to continue, supported by strong domestic consumption, investment, and stable policy frameworks, even amid global challenges, positioning India for sustained economic expansion.
