India's Economic Momentum Accelerates Towards $4 Trillion Milestone
India's economy is firmly positioned to achieve growth exceeding 7 percent during the current fiscal year, with projections indicating the Gross Domestic Product will surpass the significant $4 trillion threshold in FY26, according to Chief Economic Adviser V Anantha Nageswaran.
The optimistic forecast comes following the release of stronger-than-anticipated second-quarter economic data that revealed an impressive 8.2 percent GDP expansion during the July-September period. This represents the highest growth rate witnessed in six consecutive quarters, signaling robust economic recovery and sustained momentum.
Strong Fundamentals Driving Growth
Nageswaran, while addressing media representatives after the Q2 GDP data announcement, emphasized that the economy's current trajectory makes the $4 trillion achievement feasible within this year. He noted that India's GDP had reached $3.9 trillion by the conclusion of March 2025, setting the stage for this historic economic milestone.
"The initial half of the financial year has demonstrated a real GDP growth rate of 8 percent. We can now confidently state that the complete annual growth will either reach 7 percent or potentially exceed that figure, rather than falling below it," the Chief Economic Adviser declared.
The manufacturing sector emerged as a primary growth driver during the second quarter, experiencing a substantial surge in output. Simultaneously, service industries recorded double-digit expansion, contributing significantly to the overall economic performance. The reduction in GST rates played a crucial role in supporting factory production, effectively counterbalancing slower agricultural growth.
Consumption and Revenue Indicators Show Strength
Multiple economic indicators reinforce the positive outlook. Consumption patterns are expected to strengthen further, supported by improving price trends and ongoing tax reforms. Revenue signals remain firm, with GST collections growing by 9 percent during the April-October 2025 period, indicating resilient consumer demand and enhanced compliance levels.
Corporate financial health appears robust, with balance sheets showing significant improvement. This creates favorable conditions for increased private sector investments during the latter half of FY26, according to Nageswaran's assessment.
Rural economic activity continues to demonstrate resilience, supported by favorable crop yields and enhanced income levels. Tractor sales in October reached their highest point in eleven years, bolstered by strong monsoon conditions, festive season demand, and the beneficial impact of GST reductions. Retail sales of two-wheelers and three-wheelers also experienced their most substantial monthly growth in several years.
Structural Reforms Enhancing Competitiveness
Inflation management remains effective, with core inflation maintaining stability. Healthy reservoir levels and timely Rabi season sowing activities reinforce positive expectations for food price trends.
The Chief Economic Adviser highlighted that comprehensive structural reforms—including the implementation of Labour Codes, GST rationalization, the new personal income tax framework, and deregulation initiatives—are collectively improving business environment ease and boosting productivity across sectors.
"The combination of stable inflation, sustained public capital expenditure, and ongoing reform momentum positions the economy to effectively navigate potential risks, as evidenced by upward revisions to FY26 GDP growth projections from various analytical agencies," Nageswaran stated.
He further emphasized that growth momentum continues to strengthen, driven primarily by manufacturing expansion, services sector performance, and benefits derived from GST implementation.
The Economic Survey conducted earlier had projected FY26 growth within the range of 6.3 to 6.8 percent, but current indicators suggest the actual performance may exceed these initial expectations.
