India's Economic Resilience Shines Through Global Challenges

Despite facing global uncertainties due to geopolitical shifts and trade tensions, India's real GDP growth is projected to remain steady at 6.5% for the fiscal year 2026, according to a report by CRISIL Intelligence. This forecast hinges on two critical factors: a normal monsoon season and stable commodity prices, both expected to keep food inflation in check.

Driving Forces Behind the Growth

The report highlights that cooling food inflation, tax benefits from the Union Budget 2025-26, and lower borrowing costs will significantly boost discretionary consumer spending. Furthermore, India's economic growth is expected to gradually return to pre-pandemic levels as the effects of fiscal stimulus wane and the high-base effect diminishes.

Sector-Wise Growth Projections

CRISIL projects that the manufacturing sector will grow by 9% annually between fiscal 2025 and 2031, up from 6% in the pre-pandemic decade. Meanwhile, the services sector, though expected to grow at a slower pace, will continue to be the primary driver of growth. The share of manufacturing in GDP is anticipated to rise from 17% in fiscal 2025 to 20% by 2031.

Challenges and Opportunities Ahead

Despite these optimistic projections, the global trade environment poses significant challenges. Uncertainties around tariffs and trade policies could hinder India's ability to acquire advanced technologies, scale up industries, and boost exports. However, initiatives such as Make in India, the phased manufacturing programme, and the production-linked incentive (PLI) scheme are already showing positive results across various sectors.