India's GDP Growth Hits 7.4%, Trade Deals to Fuel Investment Boom

The Indian economy remains resilient on the back of the festive demand and steady improvement in economic activity. Strong festive sales along with GST rationalisation 2.0 and income tax cuts are expected to boost the consumption sector, economists said.

Uptick in demand has already been reflected by recent momentum from some of the high-frequency indicators, such as auto sales. Additionally, trade agreements with the UK, Oman, and New Zealand are expected to lift growth higher, Bank of Baroda Economist Jahnavi Prabhakar said.

However, some downside risk to these estimations emerges due to global headwinds, especially the geopolitical risks and trade tariffs.

"Investment and consumption continue to remain critical factors supporting the growth in the coming months. Focus would also move towards the Union Budget, corporate performance in Q3 and Q4 and RBI's rate decision," Prabhakar said.

"For FY27, we expect the real GDP at 7-7.5 per cent against our projection of 7.4-7.6 per cent in FY26," she mentioned.

According to PHDCCI President Rajeev Juneja, the robust growth of more than 7 per cent real GDP is supported by the impetus given by government expenditure and industry investment.

The Government Final Consumption Expenditure (GFCE) is estimated to increase to 5.2 per cent (YoY) and Gross Fixed Capital Formation (GFCF) to 7.8 per cent in FY 2025-26, he said.

PHDCCI CEO and Secretary General Dr Ranjeet Mehta said that the government's sustained focus on strengthening supply-chain resilience, accelerating structural reforms, and scaling up infrastructure creation is expected to further reinforce India's growth trajectory.

"These measures, combined with a strong macroeconomic framework and rising private investment, will accelerate India's development momentum and position the economy for sustained and resilient growth," he noted.

ICRA Ltd's Senior Economist Rahul Agrawal said the growth in the industrial and agricultural sectors is expected to fare somewhat better than the NSO's estimate for H2 FY2026, while services growth is likely to trail the same.

"ICRA does not expect a fiscal slippage over the targeted 4.4 per cent of GDP, as higher-than-budgeted non-tax revenues and likely expenditure savings would provide a buffer against the expected miss on taxes," Agrawal said.

- IANS