India GDP Growth Forecast FY26 Raised to 7–7.5% on Strong Domestic Demand

India GDP growth forecast FY26 has been raised to 7–7.5% as RBI, CareEdge, ADB and Crisil cite strong demand, low inflation and policy support.

India’s economic outlook has turned decisively stronger, with the India GDP growth forecast FY26 now revised upward to a robust 7–7.5 percent range. Leading institutions including the Reserve Bank of India (RBI), CareEdge Ratings, the Asian Development Bank (ADB) and Crisil have upgraded their projections, citing resilient domestic demand, easing inflation and sustained policy support.

The revised India GDP growth forecast FY26 marks a clear improvement from earlier estimates in the 6.5–6.9 percent range. This upgrade reinforces India’s position as the fastest growing major economy at a time when global growth remains uneven and advanced economies face slowing momentum.

Rating agencies and RBI lift growth projections

CareEdge Ratings has raised its India GDP growth forecast FY26 to 7.5 percent, up from 6.9 percent earlier. The agency attributed the upgrade to stronger than expected first half performance and broad based momentum across manufacturing and services.

CareEdge expects growth to moderate slightly to around 7 percent in FY27 as the economy transitions to a more sustainable expansion path. The agency highlighted robust private consumption, steady government capital expenditure and improving corporate balance sheets as key pillars supporting the India GDP growth forecast FY26.

The RBI has also revised its outlook higher, lifting its India GDP growth forecast FY26 to 7.3 percent, an increase of 50 basis points from its previous estimate. The central bank signalled confidence that domestic demand will remain resilient even as global trade conditions stay weak.

The ADB has raised its India growth estimate to 7.2 percent for FY26, pointing to strong consumption, tax support measures and encouraging second quarter GDP data. Crisil has similarly upgraded its forecast to 7 percent, from an earlier projection of 6.5 percent.

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Benign inflation creates room for policy support

Economists say the improved India GDP growth forecast FY26 is closely linked to a favourable inflation environment. CareEdge estimates average CPI inflation at 2.1 percent in FY26, with a gradual return toward 4 percent in FY27, comfortably within the RBI’s tolerance band.

Crisil projects CPI inflation to ease to around 2.5 percent in FY26, down from 4.6 percent in FY25. This subdued inflation backdrop provides policymakers with room to maintain a growth supportive stance without compromising macroeconomic stability.

Market participants expect the RBI to remain flexible on interest rates, supporting the elevated India GDP growth forecast FY26 if domestic and global conditions allow.

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Fiscal consolidation strengthens confidence

Fiscal metrics are also improving alongside stronger growth. CareEdge projects the Centre’s fiscal deficit at about 4.4 percent of GDP in FY26, narrowing further to 4.2–4.3 percent in FY27.

This steady consolidation adds credibility to India’s medium term macro framework, even as the India GDP growth forecast FY26 remains elevated. Analysts say the combination of strong growth and fiscal discipline enhances India’s appeal to long term investors.

Trade tensions pose risks but exports stay resilient

Despite the optimistic outlook, economists caution that external risks continue to weigh on the India GDP growth forecast FY26. The United States has imposed additional duties on several Indian exports, pushing tariffs on some products as high as 50 percent.

These measures affect labour intensive sectors such as textiles, gems and jewellery and marine products. However, recent trade data suggest that exports have remained resilient despite these pressures.

Goods exports to the US rose about 22 percent year on year in November, with shipments nearing $7 billion after two months of decline. Overall exports increased by 19–22 percent, while the merchandise trade deficit narrowed sharply to around $24.5 billion, supporting the upgraded India GDP growth forecast FY26.

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External balances and investment flows remain supportive

CareEdge expects India’s current account deficit to stay contained at around 1 percent of GDP in FY26 and FY27. Strong services exports and stable remittance inflows help reduce vulnerability to external shocks.

Foreign direct investment continues to flow into sectors such as electric vehicles, renewable energy, electronics manufacturing, data centres and AI related infrastructure. These investment trends underpin confidence in the stronger India GDP growth forecast FY26.

While some moderation in activity is expected in the second half of FY26 due to base effects and easing festive demand, economists believe growth will remain within the 7–7.5 percent India GDP growth forecast FY26 band. With inflation under control, policies supportive and investment pipelines healthy, India is set to remain a global growth outlier.