India projects strong 7.4% GDP growth for FY26 despite tariff row, outpaces RBI forecast

India on Wednesday forecast economic growth of 7.4 per cent for the 2025–26 fiscal year, highlighting the resilience of Asia’s third-largest economy despite a global slowdown and tight financial conditions amid tight tariff pressure under US President Donald Trump.

According to a report in ET, the estimate is marginally higher than the Reserve Bank of India's latest projection of 7.3 per cent, and exceeds last year's 6.5 per cent growth. Nominal GDP, which includes inflation, is expected to moderate to 8 per cent for this fiscal year from 9.7 per cent a year earlier. These numbers will form the base ‍for ⁠the ⁠federal union budget due to be announced on February 1.

In the second quarter of FY26, India’s economic momentum picked up pace with GDP growth growing to a six-quarter high of 8.2 per cent, improving on the 7.8 per cent improving in the April–June quarter. In the last two fiscals, India had recorded growth of 6.5 per cent and 9.2 per cent.

The economy of India remains robust

The data indicated that the economy of India remains robust at a time of global uncertainty, supported by a resilient services sector, raising investment and focused government spending. Higher industrial output, improved credit availability and continued structural reforms are helping sustain growth, keeping India among Asia’s fastest-growing major economies despite mounting external challenges.

The government came up with the income tax relief for the middle class and lowered GST rates during the fiscal year across a wide range of products from September 22, prompting to ease the prices at the retail level. Industry executives stated that the twin measures assisted in reviving demand by including more disposable income in the hands of consumers and reducing the everyday cost of goods.

The data also showed that real Gross Value Added (GVA) is projected to rise by 7.3 per cent in FY26, compared with 6.4 per cent in FY25. Meanwhile, nominal GVA growth is expected to slow to 7.7 per cent this fiscal from 9.3 per cent in the previous year. Government expenditure is forecast to increase by 5.2 per cent in 2025–26, up sharply from a 2.3 per cent rise last year.