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India's economy projected to grow at 6.5% in FY26: EY report

01 Apr '25

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India's economy projected to grow at 6.5% in FY26: EY report

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India's economy is likely to grow at 6.4 per cent in FY25 and at 6.5 per cent in FY26, EY Economy Watch said.
It stressed that a well-calibrated fiscal strategy that backs human capital development while maintaining fiscal prudence could enhance long-term growth.
The government's fiscal deficit as per the revised estimates may be hit by any subsequent supplementary demand for grants, it noted.

India’s economy is expected to grow at 6.4 per cent in fiscal 2024-25 (FY25) and at 6.5 per cent in FY26, according to the March edition of EY Economy Watch, which stressed that a well-calibrated fiscal strategy that supports human capital development while maintaining fiscal prudence could significantly enhance long-term growth prospects.

The FY25 third quarter (Q3) growth is estimated at 6.2 per cent, implying a required growth of 7.6 per cent in Q4 to deliver an annual GDP growth of 6.5 per cent estimated by the country’s National Statistical Organisation (NSO).

"A 7.6 per cent growth in the last quarter will require a 9.9 per cent growth in private final consumption expenditure. Such a high growth has not been experienced in recent years," the report said.

"An alternative to this is to increase investment expenditure, where the government's capital expenditure growth plays a critical role," it noted.

The government’s fiscal deficit as per the revised estimates may be affected by any subsequent supplementary demand for grants, it added.

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