New Delhi: India’s real gross domestic product (GDP) is expected to grow at 7.5 per cent in 2025-26 and moderate to 7 per cent in the subsequent fiscal year, according to CareEdge Ratings. The report mentioned that the Indian economy is set to register better growth as compared to is major peers in fiscal 2026, despite geopolitcal tensions and trade uncertainties.
Key Drivers of India’s Economic Growth
“Global growth is projected to average at 3.1% over the next five years, staying below the pre-pandemic average of 3.7%. In the next five years, growth in the US, UK, and the Euro Area is projected to be marginally below their historical averages, while China’s growth is expected to undershoot its historical average by about 3 percentage points. However, India’s growth is projected to hold up relatively well in comparison with other economies,” the report stated.
Giving a detailed view of the Indian economy, CareEdge Ratings mentioned that the country would benefit because of good agricultural activity, reduced income tax burden, rationalisation of GST rates, RBI rate cuts, festive demand, and front-loading of exports supported growth in H1 FY26.
Income tax cuts, GST rationalisation, early festive season and easing inflation supported the acceleration in PFCE (consumption) to 7.9% in Q2 FY26. Consumer confidence for the current period for the rural segments hovered over the 100 mark since March 2025, signalling optimism, it added.
Centre will bring down debt
The CareEdge Ratings report expected the government to bring down the debt to around 50 (+/- 1%) by the end of FY31 from the estimated 56.1% in FY25. “We have based this on the assumption of nominal GDP growth averaging around 10.7% in the next five years,” it stated. It expects the government to meet its fiscal deficit target of 4.4 per cent in FY26.
It further went on to say that the growth in gross FDI (foreign direct investment) inflows shows that India’s growth story is being taken note of by overseas investors. Market reforms like the new labour code, are expected to to boost sentiments of domestic and global investors, the report added.
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