The Indian government has projected a robust economic growth rate of 7.4% for the financial year 2025-26, according to the first advance estimates released recently. This optimistic forecast comes despite persistent global uncertainties, notably high US tariffs, and slightly exceeds the Reserve Bank of India's earlier projection of 7.3%.
Growth Momentum and Consumption Trends
The estimated growth implies a 6.8% expansion in the second half of the fiscal year, following a strong 8% growth in the first half. This deceleration suggests that global headwinds continue to impact the economy. While the government has implemented significant income and GST tax cuts to spur consumption, early indicators show a mixed response. The Private Final Consumption Expenditure (PFCE), a key measure of household spending, is expected to moderate to 7.0% from 7.2% in the previous year, indicating that the stimulus has not yet fully translated into heightened demand.
Sectoral Performance and Market Moves
In sector-specific news, India's services activity showed signs of slowing in December. The Services Purchasing Managers' Index (PMI) fell to an 11-month low of 58.0, down from 59.8 in November, primarily due to slower growth in new business orders. This mirrored a similar trend in manufacturing, where the PMI dropped to a two-year low of 55.0. It is important to note, however, that any reading above 50 indicates expansion, meaning both sectors continue to grow, albeit at a more measured pace.
On the markets front, shares of Indian oil companies like Oil and Natural Gas Corp. Ltd (ONGC) saw gains following news of the US military operation in Venezuela. Investors are optimistic about potential benefits for Indian firms from a restructuring of Venezuela's oil industry and the possible unblocking of long-pending dividends frozen by sanctions. Reliance Industries Ltd (RIL) is also poised to gain from lower crude oil prices, with Brent crude slipping below $60 per barrel amid the geopolitical intervention.
Persistent Trade Deficit and Commodity Surge
A significant concern highlighted by the government's think-tank, Niti Aayog, is India's high trade deficit with several partner countries, despite existing Free Trade Agreements (FTAs). In its latest quarterly trade review, Niti Aayog noted that imports from these nations are growing faster than exports, particularly with blocs like the Association of Southeast Asian Nations (ASEAN) and the UAE. The report emphasized the need for deeper value-chain integration and enhanced domestic competitiveness within these trade pacts.
Meanwhile, in global commodities, copper prices have soared to record highs in early 2026. The London Metal Exchange benchmark hit an all-time peak of $13,264 per tonne on 6 January, driven by strong demand from the electric vehicle, renewable energy, and artificial intelligence sectors, coupled with supply shortages from major mines in Indonesia and Chile. Trade uncertainty has further fueled stockpiling in the West, exacerbating the supply crunch.
Other Key Numbers from the Week
30%: The equity stake Universal Studios is acquiring in Excel Entertainment, valuing the production house at over ₹2,400 crore.
28.9 million: Voters removed from Uttar Pradesh's electoral rolls after a special revision drive, accounting for 18.7% of the total list.
₹10,000 crore: The proposed central outlay for a national programme to build girls' hostels in over 800 districts.
94 per dollar: The level to which UBS Investment Bank expects the rupee to depreciate by FY27, citing structural headwinds like capital outflows.
5.1 magnitude: The earthquake that hit central Assam, with tremors felt in Bangladesh, Nepal, and Bhutan.
