Indian Economy Maintains Strong Growth Momentum

Key Highlights

• The Indian economy continues to maintain strong growth momentum, supported by broad-based economic activity.
• The revised 7-7.4% growth projection for FY27 has been upwardly revised by the Economic Survey, based on the new GDP series.
• Fiscal consolidation remains on track, with the fiscal deficit estimated at 4.5% of GDP for 2025-26 (RE).

Policy Certainty and Exports

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• Improved policy certainty resulting from successful trade agreements, including progress in India-US and India-EU negotiations, is expected to support exports and capital flows.
• The Chief Economic Advisor highlighted that favourable trade agreements will contribute to the economy's growth momentum.

Economic Indicators

• The economy continues to benefit from favourable supply-side conditions, including:
  • Robust rabi sowing
  • Comfortable foodgrain stocks
  • Easing global commodity prices
• These conditions are expected to keep inflation low and stable.

Investment and GDP Growth

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• Private sector investment in machinery and equipment has accelerated in 2024-25.
• Unincorporated enterprises have also maintained investment in machinery.
• India is on track to cross the $4 trillion GDP mark in 2026-27.

Capital Flows and AI Story

• The lack of an AI story in Indian capital markets in 2025 is seen as a potential handicap, but could be an advantage for capital flows in 2026.