New Delhi, January 14. The Indian economy is set to maintain its robust growth trajectory, according to consultancy firm Grant Thornton Bharat. The firm predicts a growth rate between 7.3 and 7.5 percent for the fiscal year ending March 2026. This projection aligns closely with the National Statistics Office's First Advance Estimates, which indicate a 7.4 percent growth for 2025-26.
Growth Outlook and Sectoral Drivers
Rishi Shah, Partner and Economic Advisory Services Leader at Grant Thornton Bharat, shared these insights during an interaction with PTI. He highlighted that the strong performance in services and manufacturing sectors is fueling this growth. This momentum ensures India retains its position as the world's fastest-growing major economy, up from 6.5 percent in the previous fiscal year.
Looking ahead, Shah anticipates a slight slowdown. He expects growth to moderate to around 7 percent in the 2026-27 fiscal year. This forecast considers various economic factors and global trends.
External Challenges and Geopolitical Factors
Shah identified external pressures as significant concerns for the economy. He pointed to geopolitical developments, particularly in South America and the Middle East, as potential disruptors to supply chains. These issues could pose challenges despite current resilience in exports, even amid US tariffs on Indian imports.
"Any policy decision made today will show its true impact only after a few years," Shah noted. He emphasized India's need to actively participate in the new wave of industrialization sweeping advanced economies.
Expectations from the Union Budget
Regarding the forthcoming Union Budget, Shah described it as a directional document reflecting the government's future mindset. He stressed that the main thrust this year should focus on improving the ease of doing business. This approach could further stimulate economic activity and investment.
Currency Stability and Monetary Policy
On the rupee's performance, Shah believes it will stabilize around the current level of 90 to a US dollar. He argued that a slightly weaker currency serves India's purpose, especially since the country imports many essential goods. "We should learn to live with a currency which is slightly weaker," he added.
Shah also commented on monetary policy, suggesting the Reserve Bank of India has room for one more rate cut. With inflation consistently below the RBI's lower margin of 4 to 6 percent, hovering around 4 percent despite food price volatility, he sees a case for a 25 basis point reduction. However, he cautioned against expecting cuts beyond that.
The RBI began its rate-cutting cycle in February last year, cumulatively reducing the repo rate by 125 basis points to 5.25 percent. The Monetary Policy Committee is scheduled to meet from February 4 to 6, where these factors will likely be discussed.
