India's economy expected to grow at 6.7-6.9% in FY26 amid reforms: Deloitte

Deloitte India on Thursday projected India's economy to grow 6.7-6.9 per cent in the current fiscal amid buoyant demand and policy reforms.

Indian economy grew 7.8 per cent in the April-June quarter of current fiscal.

Deloitte India's 'India Economic Outlook' report forecasts a GDP growth between 6.7 and 6.9 per cent, averaging 6.8 per cent this fiscal year, up by 0.3 percentage points from Deloitte's previous forecast.

This performance signals not just resilience but a renewed sense of India emerging stronger than most nations. Similar growth rates are expected in the subsequent year, but the range of variation remains broader due to uncertainties associated with trade and investment.

The GDP growth forecast is in lines with the RBI which projected FY26 economic growth at 6.8 per cent.

Growth is likely to be supported by buoyant domestic demand, accommodative monetary policy, and structural reforms, such as GST 2.0. Low inflation will contribute to spending as purchasing power improves, Deloitte said.

Deloitte India Economist Rumki Majumdar said demand during the festive quarter will likely be fuelled by a notable rise in consumption spending. This is expected to be followed by strong private investment, as businesses respond to uncertainties and prepare to meet elevated demand.

"There is also anticipation that India will strike a deal with the US and the EU by the end of the year, which is expected to elevate overall investment sentiments. Strong growth in the first and third quarters is likely to drive overall annual growth," Majumdar said.

However, growth in the current fiscal year remains vulnerable to global headwinds.

Escalating trade uncertainties and India's inability to secure a trade deal with the United States are potential risks that could impact India's economic growth.

Restrictions on access to critical minerals and higher inflation in the West could lead to increased inflationary pressures in India.

Majumdar said while years of policy efforts have helped bring down headline inflation largely due to easing food and fuel prices core inflation remains stubbornly high, consistently above 4 per cent since February. This persistent price pressure could constrain the Reserve Bank of India's ability to pursue further rate cuts.

"Moreover, if the US Federal Reserve maintains elevated policy rates for an extended period, it could tighten global liquidity conditions, further limiting the RBI's monetary flexibility. Such a scenario may also accelerate capital outflows from emerging markets like India, a trend already visible in recent months," Majumdar added.

Deloitte said while the recent policy efforts have focused on boosting domestic consumption, the next frontier lies in empowering the MSME sector, which sits at the intersection of employment, income generation, exports, and investment.