India’s Economy to Grow 6.4% in FY 2025-26, Say Economists
India’s economy to grow 6.4% in FY 2025-26, says a Reuters poll of 51 top economists. The Indian economy will continue to be the world’s fastest-growing large economy, driven primarily by continued government capital spending and infrastructure works.
Though this is a marginal fall from the 6.5% FY 2024-25 projection, it is a robust performance in the backdrop of global economic uncertainty.
Government Capex to Punt India’s Economy to Grow 6.4% in FY 2025-26
Public Spending in the Limelight
Among major reasons India’s economy will grow 6.4% in FY 2025-26 is the government’s consistent thrust on public capital expenditure and public infrastructure. Roads, rails, urban housing, and renewables have taken precedence in Union Budget outlays.
This govt expenditure not only creates direct jobs but also creates demand for supporting industries such as cement, steel, logistics, and services.
India’s Economy to Grow 6.4% in FY 2025-26 Amidst Private Investment Jitters
Corporate Expenditure Trails
Even with robust public spending, private sector expenditure is slow. A number of economists quoted low business confidence, over-regulatory bureaucracies, and too many project clearances as the obstacles that had kept private firms from opening their wallets.
This public-private capital imbalance may be a drag on long-term sustainable growth unless remedied in the near future.
India’s Economy to Grow 6.4% in FY 2025-26 but Job Employment of Youth Remains a Concern
Job Creation of Young Indians, is still a big question
Work, particularly among India’s huge youth base, is also a problem. Even though employment has been created in the services and the technology sector, employment in manufacturing and MSME hasn’t recovered fully since post-pandemic.
Experts warn that if the country does not boost formal employment generation, rising unemployment can suffocate consumption and put domestic growth on the slow track.
India’s Economy to Grow 6.4% in FY 2025-26 Amid Global Tensions
India–US Trade Deal in Doubt
Another risk to this projection is the derailed India-US trade talks. Analysts note the July 9 deadline for reaching an accord on tariff imbalances now looms over it. If the agreement fails, tit-for-tat tariffs can be levied, impacting Indian exports of textiles, pharmaceuticals, and auto components.
Trade tensions pose a risk to India’s external sector, which is at the centre of its growth story, and this has the potential to moderate the projection slightly in the subsequent update.
India’s Economy to Grow 6.4% in FY 2025-26 but Inflation and Rates Must Stay in Check
RBI’s Role in Price Stability
While inflation has overall been contained in 2025, any disturbances in the supply-side (fuel or food price inflation) would push consumer prices up yet again. The Reserve Bank of India (RBI) has also remained vigilant, maintaining interest rates unchanged while monitoring global cues.
Economists think that low inflation and stable monetary policy are crucial to enable lending, consumption, and investment over the next few quarters.
India’s Economy to Grow 6.4% in FY 2025-26: Outlook Positive But Conditional
Summary of Key Drivers & Risks
Positive Drivers:
- Strong government capital spending
- Growing fintech and digital space
- Steady rural consumption and infrastructure spending
Risks and Concerns:
- Slow private corporate investment
- Increase in youth unemployment
- Uncertainty in trade between India and the US
- Volatility in global oil prices
Conclusion: India’s Economy to Grow 6.4% in FY 2025-26 – A Balancing Act Ahead
While the estimated 6.4% growth is high relative to most developed nations, India must continue to deal with deep structure problems so that this rate is maintained. Improved private investment, improved employment generation, and trade diplomacy will unlock the true growth potential of India in FY 2025-26 and later.
