THEBUSINESSBYTES BUREAU

NEW DELHI, FEBRUARY 1, 2026

India’s economy is poised to sustain its strong growth trajectory, with real Gross Domestic Product (GDP) projected to expand by a robust 7.4 per cent in FY 2025–26, underscoring the resilience of domestic fundamentals amid global uncertainties. The outlook was outlined in the Macroeconomic Framework Statement tabled in Parliament alongside the Union Budget for FY 2026–27 by Union Finance Minister Nirmala Sitharaman.

The statement pegs nominal GDP growth at 8 per cent in FY26 and projects a sharper 10 per cent expansion in FY 2026–27 over the first advance estimates of FY26, reflecting sustained momentum in consumption, investment and the impact of ongoing structural reforms. The services sector continues to anchor growth, with output expected to rise by a strong 9.1 per cent in FY26, while manufacturing and construction are estimated to grow at 7 per cent each. Agriculture, supported by improved productivity and policy interventions, is projected to record a growth of 3.1 per cent.

Domestic demand remains the backbone of economic expansion. Private Final Consumption Expenditure is projected to grow by 7 per cent and account for 61.5 per cent of GDP, marking its highest share since FY 2011–12. Government final consumption expenditure is also set to rebound, growing by 5.2 per cent in FY26, compared to 2.3 per cent in the previous year. Investment activity remains healthy, with Gross Fixed Capital Formation expected to rise by 7.8 per cent, maintaining its steady share of around 30 per cent of GDP for the third consecutive year.

On the external front, India’s exports of goods and services touched USD 825.3 billion in FY25 and continued to show resilience in FY26 despite a volatile global trade environment. Merchandise exports grew by 2.4 per cent during April–December 2025, while services exports expanded by 6.5 per cent. Gross foreign direct investment inflows stood at USD 81 billion in FY25, with FY26 recording the highest inflows in the first seven months of any financial year. The current account deficit narrowed to 0.8 per cent of GDP in the first half of FY26.

The Union Budget 2026–27 reaffirms the government’s commitment to fiscal consolidation, targeting a fiscal deficit of 4.3 per cent of GDP and a gradual reduction in central government debt to 55.6 per cent of GDP in FY27. With strong tax buoyancy, rising capital expenditure and continued reforms, the Finance Ministry expressed confidence that India remains firmly on course toward its medium-term goal of reducing the debt-to-GDP ratio to around 50 per cent by FY 2030–31, aligning with the broader vision of building a “Viksit Bharat.”