India's economic landscape is showing remarkable strength as the country prepares to cross the significant $4 trillion milestone, with growth projections exceeding initial estimates for the current financial year.
Robust Growth Exceeds Expectations
Chief Economic Adviser V Anantha Nageswaran announced on Friday that the Indian economy is expected to grow at 7% or higher during the current financial year, surpassing the earlier projections of 6.3-6.8% made in the Economic Survey presented before the Budget. This upward revision comes on the back of an impressive 8% real GDP growth rate recorded in the first half of the financial year.
"The first half of the financial year has recorded a real GDP growth rate of 8%. Now we can state comfortably that the full year growth will be either 7% or to the north of that, rather than to the south of that," Nageswaran stated following the release of data by the National Statistics Office.
Sector-Wide Momentum Driving Expansion
The economic momentum is spreading across all key sectors - agriculture, manufacturing, and services - fueled by multiple positive factors. According to the CEA's assessment, healthy harvests, strong rural and urban demand, low inflation, and tax reforms are creating a perfect storm for sustained growth.
Nageswaran highlighted that "improving price dynamics and tax reforms are expected to boost household disposable incomes, strengthening the near-term consumption outlook." He also noted that healthy corporate sector balance sheets indicate sustained private investments in the second half of FY2025-26.
Strong Indicators and Rural Recovery
The third quarter (October-December) of the current fiscal year has begun on a solid foundation, with several key indicators showing positive trends:
- E-way bills generation showing increased economic activity
- Non-food credit pickup indicating business expansion
- Growth in energy consumption and freight movement
- Record tractor sales in October 2025 - highest in eleven years
- Strong growth in two and three-wheeler retail sales
Rural consumption continues to strengthen, driven by favorable agricultural incomes resulting from healthy crop output. The CEA attributed the rural revival to multiple factors including "favourable monsoon conditions, improved rural sentiment, festive demand and the recent GST rate reduction."
Stable Inflation and Labor Reforms
On the price front, Nageswaran provided reassuring news, stating that core inflation remains stable. The food supply outlook appears positive due to timely rabi sowing and healthy reservoir levels, which should help maintain price stability.
The CEA also emphasized the importance of the recently-notified new labour codes, which are expected to "help build a future-ready workforce and resilient industries," positioning India for long-term sustainable growth.
The confluence of stable inflation, sustained public capital expenditure, and ongoing reform momentum has prompted various agencies to revise their GDP growth projections upward for FY26, reflecting growing confidence in India's economic trajectory.
