The first advance estimate of Gross Domestic Product, 2025-26, has predicted that the Indian economy would grow by 7.4 per cent in the current fiscal.
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The first advance estimate of Gross Domestic Product, 2025-26, released by the Ministry of Statistics and Programme Implementation (MoSPI) has predicted that the Indian economy would grow by 7.4 per cent in the current fiscal, over the growth rate of 6.5% in FY 2024-25. Such an impressive growth rate will not only help India to remain the fastest growing economy in the world, but also allay any fear regarding the effect of the punitive tariff imposed by the United States (US). It must be admitted here that when the entire world is going through lot of turmoil, India’s economic progress may be a lesson for other countries to learn as the country’s financial growth is not just a flash in the pan; rather, it has bounced back even after being contracted by nearly 25 per cent during COVID pandemic. Many experts have praised India’s growth momentum for successfully sustaining global tensions, while others have argued that the country’s economy has been able to show resilience due to festive demand and steady improvement of economic activities. In this context, they praise a couple of decisions like easing GST slabs, increase in public and infrastructural spending etc. taken by the government as timely and effective.
Although it’s praiseworthy that despite global headwinds the Indian economy has managed to stay on the growth path, there are still some areas where extra efforts are needed for sustaining the growth rate in the future. For instance, the country has decided to reduce its borrowings to 50 per cent of GDP by 2030-31 fiscal, which at present stands at 56.1 per cent. To achieve the target, the Indian economy needs to register a higher growth rate. In this regard, it must be mentioned that for the first half of the ongoing fiscal, the country’s economy was going in the right direction. During that period, it grew by 8 per cent. But according to the first estimate, the economy has failed to maintain that momentum as it is expected to grow by only 6.5 per cent in the latter half of the 2025-26 fiscal. This is a setback to the country’s ambitious plan to bring down borrowing by 2030-31.
In the previous budget, it was stated that in the current fiscal, India’s growth rate at the present market rate might be as high as 10.1 per cent. But as per the first estimate, it will not go beyond 8 per cent, which is a little worrying because the government’s income from taxes will not grow as anticipated and that may increase borrowings if the GDP doesn’t grow as per the present market rate. However, the good news is that the present market rate will remain constant for the time being which may provoke the Reserve Bank to reduce the interest rate. The economy of the country is showing signs of improvement despite the uncertain global scenario and it may reap rich benefits if we tread with caution.