India’s real Gross Domestic Product (GDP) growth for FY26 is forecasted to range between 6.3% and 6.8%, according to the Economic Survey 2024-25. This projection suggests a slowdown in the country’s economic performance next year. Despite this, the survey highlights that the fundamentals of the domestic economy remain strong, backed by a stable external account, gradual fiscal consolidation, and solid private consumption.
Slower Growth Expected for FY25
India’s economy is expected to expand at a slower pace of 6.4% in FY25, marking the slowest growth in four years and a significant drop from the 8.2% growth recorded in FY24. The slowdown is primarily attributed to challenges in the manufacturing sector and a slower pace of corporate investments.
In contrast, India’s GDP grew at 7.2% in 2022-23 and 8.7% in 2021-22, remaining the fastest-growing major economy globally.
Concerns Over Economic Slowdown
The slowing pace of growth has raised concerns, with India’s GDP growth dipping to a seven-quarter low of 5.4% in the second quarter of FY25, compared to 8.1% during the same period last year. Business spending has moderated, inflation remains high, and wage growth has stagnated, all contributing to weakened consumer spending and corporate profits.
The slowdown has led some analysts to question whether the post-pandemic economic boom was simply a temporary rebound fueled by pent-up consumer demand after the lockdowns of 2020.
The Challenge to Achieve 8% Growth
Prime Minister Narendra Modi’s ambitious goal of making India a developed nation by 2047 hinges on achieving consistent high growth rates, ideally around 8% annually. However, economists and international organizations have expressed concerns over the feasibility of this target in the coming years.
The International Monetary Fund (IMF) projects India’s growth to average 6.5% over the next few years, while the World Bank estimates a slightly higher growth rate of 6.7%. According to Goldman Sachs, India’s growth rate is expected to be around 6% for FY24, with a slight increase to 6.3% in FY25.
