'IMF's FY26 growth forecast for India likely to be revised upwards'

'The Indian economy has shown remarkable resilience amid global uncertainty and US tariffs, International Monetary Fund’s Mission Chief for India

- Harald Finger tells Ruchika Chitravanshi in a virtual interaction. Edited excerpts:

With India’s gross domestic product (GDP) up 8.2percent in the second quarter of 2025-26 (Q2FY26), will IMF review its FY26 growth estimate of 6.6 per cent?

= India’s economy has shown remarkable resilience, thanks to strong domestic conditions. GDP growth in the September quarter ‘was well above expectations. The 50 per cent US tariffs that have been placed since August are beginning to weigh on the economy to some extent. The recent trade has shown some initial signs of resilience, with the drop in exports to the US partially offset by increasing exports to other countries. When you take all this into account, there are significant upside risks to our projection of 6.6 percent for FY26. We would be providing an update to our projection in the upcoming World Economic Outlook update in January. On the growth front, based on the strong trends of the September quarter, it is likely that there would be an upward revision.

Do you think the IMF overestimated the impact of tariffs on the Indian economy?

= The rise in tariffs is affecting India’s export sector, but the overall economic impact is manageable. Heightened uncertainty over bilateral trade policy with the US could dampen domestic investment and foreign direct investment (FDI) in India. Our baseline estimates, which we made when the 50 per cent tariffs were just announced, suggested moderate impact over the next financial year, assuming tariffs persist, but recent trade data shows signs of resilience. So, it is possible that the effect of the tariffs would be somewhat smaller than we projected, but it is too early to come to a full assessment. We will need at least a few more months of data to reassess this.