From International Monetary Fund (IMF) to Fitch Ratings, leading international institutions have shown great trust in India’s resilient GDP growth — despite geopolitical disruptions and tariffs and driven by robust domestic demand and sweeping tax reforms, as India remains the world’s fastest-growing economy.
New Delhi/Washington: Despite external headwinds, India's economic growth rate in FY26 is expected to remain robust, supported by favourable domestic conditions, according to a recent IMF report. Under the baseline assumption of prolonged 50 per cent US tariffs, India’s real GDP is projected to grow at 6.6 percent in FY 2025-26 before moderating to 6.2 percent in FY 2026-27, the report stated.
It highlighted that the reform of the goods and services tax (GST) and the resulting reduction in the effective rate are expected to help cushion the adverse impact of tariffs. Headline inflation is projected to remain well contained, reflecting the one-off effect of the GST reform and continued benign food prices. Looking ahead, India’s ambition to become an advanced economy can be supported by advancing comprehensive structural reforms that enable higher potential growth, it said.
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IMF’s Executive Directors commended India’s very strong economic performance and resilience, which has benefited from sound macroeconomic policies and reforms. Amid high uncertainty, the directors called for continued sound policies and noted that accelerated implementation of structural reforms will be critical to maintain stability and support India’s ambition of becoming an advanced economy.
The IMF has also recognized India's Unified Payments Interface (UPI) as the world’s largest retail fast-payment system by transaction volume.
Meanwhile, India's financial sector outperformed major global peers with broadly positive outcomes amid geopolitical tensions, tariff wars and supply‑chain disruptions, showcasing resilience and stability.
The financial sector saw accelerated credit growth of around 20 per cent led by NBFCs, with retail loans, MSME financing and specialised credit such as gold and vehicle loans contributing substantially, while banks maintained steady growth in retail and MSME lending, said the report from Grant Thornton.
Fitch Ratings has revised India’s GDP growth forecast for FY26 to 7.4 per cent, from 6.9 percent projected earlier. The global rating agency said that private consumer spending is the main driver of growth in the country this fiscal, “supported by strong real income dynamics, increased consumer sentiment, and the impact of recently implemented goods and services tax reforms”.
India’s real GDP growth surged by 8.2 percent during the July-September quarter of 2025-26. According to Fitch, the growth comes despite India facing one of the highest effective tariff rates on its exports to the US of around 35 percent, and an India-US trade deal would “boost external demand”.
The Reserve Bank of India (RBI) has also raised its GDP growth forecast of the Indian economy to a robust 7.3 percent for 2025-26 from 6.8 percent earlier, on the back of an improved outlook driven by strong agricultural prospects, GST rate cuts continuing to play out, low inflation and strong balance sheets of corporates and banks.
(All graphics courtesy: @mygovindia and @GoIStats)
