OECD projects India GDP growth at 6.7% for FY26 amid strong domestic drivers

As per the latest economic outlook by OECD, real GDP of India is projected to grow by 6.7% in fiscal year 2025-26, 6.2% in 2026-27 and 6.4% in 2027-28. Higher tariffs applied by the United States are expected to weigh on exports but private consumption will be supported by rising real incomes as inflation remains low and consumption taxes decline. Buoyant investment will be sustained by declining borrowing costs and strong public capital expenditure. Current low headline inflation is projected to gradually converge towards the 4% target. Risks are broadly balanced. Bilateral negotiations with the United States shall lead to lower tariffs and boost exports and investment while higher oil import prices could possibly create inflation pressures.

The current broadly neutral fiscal stance balances support to growth in the face of global trade headwinds with the need to rebuild fiscal buffers and bring public debt to a more prudent path. Monetary policy has eased since the beginning of the year but with below-target inflation and below-trend growth, there is room for further cuts in the policy rate. Sustaining strong public investment and encouraging private participation through enhanced public-private partnerships would speed up infrastructure development and ease persistent bottlenecks.

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