Economy to Grow 6.3-6.8% in FY26, US Tariffs a Downside Risk: Govt
Chief Economic Advisor V Anantha Nageswaran expressed confidence on Friday that the Indian economy is poised to grow between 6.3% and 6.8% in the current fiscal year, buoyed by strong domestic demand . This optimistic forecast comes despite acknowledging downside risks from the steep 50% tariffs imposed by the United States .
Briefing reporters after the release of robust first-quarter GDP numbers, which showed the economy expanding at a five-quarter high of 7.8% , Nageswaran suggested that the impact of the high tariffs is expected to be “short-lived” . He noted that talks are ongoing between the two countries for the removal of the 25% penal tariff and to work towards a bilateral trade deal . “Despite the reciprocal tariffs and penal tariffs (imposed by the US), and after seeing the resilience of Q1 growth, we are retaining the growth rate projections for the current fiscal at 6.3-6.8 per cent,” Nageswaran stated .
The government’s projection aligns with the forecast made in the Economic Survey presented in January . Nageswaran said he does not anticipate the downside risks to be significant and expressed hope that aggregate demand will remain strong in the upcoming quarters . He pointed to an expected GST rate cut and strong festive season demand as key drivers for consumption .
The impressive 7.8% growth in the April-June quarter was largely driven by a resilient services sector, which expanded at a two-year high of 9.3%, and a strong performance by the farm sector . However, economists have cautioned that the US tariffs, targeting India’s largest export market, could still hurt labor-intensive industries and have a domino effect on employment and consumption .
