India's economy is set to grow faster than earlier projected, with growth in FY26 expected to exceed 6.8%, driven by rising consumption following GST rate cuts and income tax relief, according to Chief Economic Advisor (CEA) V. Anantha Nageswaran.
Speaking at an event, CEA Nageswaran expressed optimism about India's growth trajectory, saying the economy is now well-positioned to outperform earlier estimates.
"I am comfortable looking at a number north of 6.8% now," he said. "My original range was 6.3 to 6.8% (as projected in the Economic Survey). Back in August, there were concerns about meeting even the lower end of the 6-7% range. Now, I am confident we will exceed it."
While Nageswaran stopped short of revising the official projection to 7%, he indicated that the second-quarter GDP data could prompt an upward revision in coming months.
Strong Start to FY26: Q1 GDP Grows 7.8%
India's economy expanded 7.8% in the first quarter of FY26, powered by robust growth in agriculture and strong momentum in services sectors such as trade, hospitality, finance and real estate. The performance marks one of the best quarterly results since the 8.4% growth recorded in Q4 FY24.
Despite global uncertainties and a challenging external environment, India continues to hold its position as the fastest-growing major economy, outpacing China's 5.2% GDP growth in the April-June quarter.
Consumption Recovery and Policy Support
The CEA attributed the sustained momentum to domestic demand recovery, especially following the GST rate cuts implemented in September and income tax relief measures introduced earlier this fiscal. These steps have boosted household spending, automotive and consumer goods sales, and investor confidence.
"Stronger consumption is now a key pillar supporting the growth outlook," Nageswaran noted, adding that government reforms aimed at reducing compliance burden and encouraging private investment will keep growth on track.
India-US Trade Deal Could Add to Growth Upside
Nageswaran also highlighted the potential impact of a breakthrough in the India-US Bilateral Trade Agreement (BTA), which could further strengthen growth momentum if concluded soon.
"If there is a resolution on the trade front, the upward bias will become a mainstream forecast," he said, while expressing hope that an agreement could be reached in the near future.
The talks follow recent tensions after the US imposed tariffs up to 50% on Indian exports in August, including a 25% penalty on oil imports from Russia. The move, initiated by the Trump administration, cited India's continued crude purchases from Russia and certain trade restrictions.
India Maintains Global Growth Leadership
Economists believe that India's combination of macroeconomic stability, policy reforms and resilient domestic demand continues to underpin its position as the world's fastest-growing major economy.
With continued policy support and easing external pressures, experts say India could realistically approach the 7% GDP mark in FY26, a milestone that would reinforce its role as a leading driver of global growth.
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