SIGNS OF SLOWDOWN

SIX MONTHS INTO FY26, WHERE’S GROWTH? HOW DOES THE US TARIFF ACTION IMPACT INDIAN INDUSTRY? THE BT-C FORE BUSINESS CONFIDENCE INDEX DOES A MID-YEAR CHECK OF THE MOOD OF INDIA INC

- SURABHI

WITH AN EXPECTED gross domestic product (GDP) growth rate of between 6% and 6.5%, India is likely to remain the fastest-growing big economy in FY26. It is already set to become the fourth-largest economy this year. This is surely a cause for celebration.

However, that is half the story. Economic growth this fiscal is seen to be much slower than in previous years, even amid expectations of a revival in private consumption, powered by the needs of 1.45 billion Indians, good rains, low inflation and interest rates, as well as personal income tax cuts.

No wonder then that the sentiment in India Inc about growth prospects—despite falling inflation, an accommodative monetary policy and good monsoon rains—is muted. This is reflected in the BT-C Fore Business Confidence Survey of 500 chief executive officers (CEOs) and chief financial officers (CFOs) conducted in the second quarter. It received largely cautious responses. The Business Confidence Index (BCI) recovered from the red to climb to 50.2 in the June quarter of FY26 (Q1FY26) from a 15-quarter low of 47.7 in the previous quarter.

But the sailing has been far from smooth. The confidence, as measured by the survey, has remained well below the average in recent years. The Q1FY26 reading was, in fact, the second lowest in 14 quarters. A number below 50 indicates a negative mood. Prior to this, it was the lowest in the December 2021 quarter, after which it was on an upward trajectory as India Inc slowly shrugged off the Covid-19 pandemic lows, except for the occasional dip.