India's GDP likely to grow 6.9 pc in 2026, US trade deal to add 20 bps: Report
Mumbai, Feb 10
India's real GDP growth will likely touch 6.9 per cent in 2026 and 6.8 per cent in 2027, and the recent US-India trade deal should add about 0.2 percentage to annual GDP growth, a new report has said.
The report from Goldman Sachs Research said, "Our analysts expect an incremental growth boost of 0.2 percentage points of GDP (annualised) with these new tariffs, based on India's goods exports exposure of roughly 4 per cent of GDP to US final demand."
The investment bank expects headline inflation to rise to 3.9 per cent in 2026, close to the Reserve Bank of India's (RBI) target of 4 per cent.
As the RBI cut rates by 125 basis points last year, with a comprehensive set of measures to inject liquidity into the system, there is limited scope for further easing, said Santanu Sengupta, Goldman Sachs Research's chief India economist.
"In 2025, our economists expect India's GDP to have grown at 7.7 per cent year-on-year, despite headwinds from US tariffs-which was the highest imposed on any country in the Asia Pacific region. That said, nominal GDP growth was at a six-year low (excluding the pandemic) due to record-low inflation," the report said.
A combination of policy rate cuts, regulatory relaxation for banks, and a weaker exchange rate eased financial conditions in India, it added. Income tax and GST cuts supported a nascent recovery in urban consumption demand, while the recovery in rural consumption was sustained.
Liquidity measures that injected Rs 6.3 trillion into the banking system should support bank credit growth and real consumption growth is likely to rise around 7.7 per cent in 2026 from 7 per cent in 2025, the report further said.
"Our economists forecast sustained rural consumption in 2026, on a strong winter harvest and continued welfare spending by state governments, particularly those heading into elections," it said.
— IANS
Reader Comments
Sustained rural consumption is the heart of this story. A strong harvest and welfare spending can really boost the economy from the ground up. Hope the benefits reach the small farmers directly. 🙏
Interesting analysis from Goldman. The point about limited scope for further rate cuts is crucial. The RBI has done a lot already. Now it's about execution and making sure credit growth fuels real investment.
7.7% growth despite US tariffs is impressive, shows resilience. But the report mentions nominal GDP growth at a six-year low because of low inflation. That's a bit of a worry for corporate profits and government revenues, no?
Good to see tax cuts supporting urban demand. As someone in Mumbai, felt a slight relief last year. Hope the momentum continues and we see more disposable income in the hands of consumers. The liquidity injection sounds massive!
While the projections are optimistic, I have a respectful criticism. These reports often overlook regional disparities. Growth in Gujarat or Maharashtra is one thing, but will states like Bihar or Odisha see similar benefits from this trade deal? The "India" story isn't uniform.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.