Steady growth
Maintaining a steady growth during these days when the world economy and trade is shrinking and witnessing a slump means that the planning and policies that are followed have to be extraordinary.
The policies followed by India need a mention here as it seems evident from the fact that India is projected to grow at 6.6 per cent in 2026, registering an exceptionally high growth in a challenging global environment with resilient private consumption and strong public investment largely offsetting the impact of high US tariffs.
Notably, the World Economic Situation and Prospects 2026 report released on the other day by the UN Department of Economic and Social Affairs said that economic growth in India is projected to moderate from an estimated 7.4 per cent in 2025 to 6.6 per cent this year.
This simply means that India will remain the world’s fastest major economy while tariffs by the US may adversely affect some product categories, key exports such as electronics and smartphones.
Moreover, strong demand from other major markets, including Europe and the Middle East, is projected to partially offset the impact and on the supply side, continued expansion in manufacturing and services sectors will remain a key driver of growth throughout the forecast period.
The report stressed that India’s growth will be supported by resilient consumption and strong public investment, which should largely offset the adverse impact of higher US tariffs.
The growth which is being predicted for India during the current fiscal is mainly being attributed to the recent tax reforms and monetary easing that is bound to provide additional near-term support.
Besides, the domestic drivers of growth have been exceptionally strong in India and one of its key components for growth remains the services exports. Perhaps one way for India to continue to take advantage as AI is involved, is to further strengthen its services exports and rely on its skilled manpower to develop some of the applications that will take AI into a productivity boosting factor beyond where it is right now.
In India, consumer price inflation fell more than expected, averaging three per cent in the first nine months of the year amid favourable base effects and lower food prices. Inflation is forecast at 4.1 per cent, close to the central bank’s midpoint target.
India also recorded strong growth in gross fixed capital formation, led by higher public spending on physical and digital infrastructure, defence and renewable energy.
In India, employment indicators remained broadly stable in 2025. The unemployment rate stood at 5.2 per cent in October 2025, compared with 4.9 per cent in 2024, while the labour force participation rate edged up in both rural and urban areas during the second half of the year.
The Indian rupee stabilised against the US dollar in the first half of the year, supported by broad dollar weakness. However, in the second half, the Indian rupee edged lower following stronger-than-expected growth in the US and ongoing trade negotiations.
Nonetheless, robust economic performance in India is expected to provide support for the country’s currency in the near term. Besides, the programmes to expand the domestic production of edible oils and pulses, modernise fertilizer and storage infrastructure, and improve logistics — even if conceived mainly to boost rural incomes and food security — have reduced dependence on imports and exposure to global shocks.
