Is India’s economy moving to a structurally higher growth path?

Robust growth along with economic stability suggest so but it's too early to draw such a conclusion

- NIRANJAN RAJADHYAKSHA

The Indian economy is likely to end the ongoing financial year on a far stronger note than what was anticipated at its beginning.

An average growth rate of 7.6% in the first half of the financial year has sent economic forecasters back to their spreadsheets and statistical models. Economic growth is now forecast to be close to 7%, or perhaps even higher, unless the six months from October see a sharp slowdown.

Meanwhile, the Reserve Bank of India expects consumer price inflation to be 2.6% over the entire year ending in March 2026, or 1.4 percentage points lower than what economists at the central bank had forecast in April.

And the current account deficit is likely to be less than 1% of gross domestic product (GDP), though weak inflows of net foreign capital continue to keep the Indian rupee under pressure despite a narrow external deficit.

The first number (GDP) is an indication of economic momentum, while the other two (inflation and current account deficit) are measures of economic stability.

This does not mean that there are no problems on the ground—corporate investment continues to be weak, job growth has been anaemic and consumer demand is held back because of inadequate growth in household incomes, for example. The spectre of global instability is also a worry.