Indian economy to grow 6.3-6.8% in FY26 despite Trump’s tariff challenges: CEA Nageswaran
Soon after the announcement of first quarter GDP numbers which came in at 7.8 per cent, Nageswaran said that high tariffs are expected to be "short-lived" as both the countries are in talks for removal of the 25 per cent penal tariff and a subsequent bilateral trade deal.
Chief Economic Advisor V Anantha Nageswaran on Friday expressed confidence that Indian economy will grow at a rate between 6.3 and 6.8 per cent in the current fiscal on strong domestic demand even as there would be some downside risks to the projections due to steep 50 per cent US tariffs.
Trump’s tariffs are expected to be short-lived
Soon after the announcement of first quarter GDP numbers which came in at 7.8 per cent, he said that high tariffs are expected to be "short-lived" as both the countries are in talks for removal of the 25 per cent penal tariff and a subsequent bilateral trade deal.
"Despite the reciprocal tariffs and penal tariff (imposed by US), and after seeing the resilience of Q1 growth we are retaining the growth rate projections for current fiscal at 6.3-6.8 per cent," Nageswaran told reporters.
He further added that the downside to GDP growth forecast for the current fiscal is unlikely to be significant.
Economic Survey projects real growth at 6.3-6.8 per cent for FY26
The Economic Survey tabled in parliament in January had projected real economic growth at 6.3-6.8 per cent for FY26.
Moreover, Nageswaran hoped that aggregate demand growth should hold up in the coming quarters as GST rate cut is on the cards and festive demand will drive consumption.
India's economy grew by a stronger-than-expected 7.8 per cent in April-June, its fastest pace in five quarters, before US President Donald Trump imposed tariffs that now cloud the outlook, threatening key exports like textiles.
GDP growth was driven mainly by farm sector
The gross domestic product (GDP) growth in the first quarter of the ongoing fiscal year was mainly driven by good showing by the farm sector, and also helped by services like trade, hotel, financial and real estate, according to the latest government data released on Friday.
The previous highest pace of growth in the country's GDP was recorded at 8.4 per cent during January-March 2024, as per the data.
It is interesting to note that India remains the fastest-growing major economy, as China's GDP growth in the April-June period was 5.2 per cent. The agriculture sector recorded a 3.7 per cent growth, up from 1.5 per cent in the April-June period of 2024-25, as per the data released by the National Statistics Office (NSO).
However, manufacturing sector growth increased marginally at 7.7 per cent in the first quarter of FY26 compared to 7.6 per cent recorded in the year-ago period.
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India posts 7.8% GDP growth in June quarter of FY26 against 6.5 per cent a year ago