GDP growth to slow to 6.3-6.8% in FY26; 8% trajectory, reforms crucial for 'Viksit Bharat'

INFRA, JOB CREATION AND SME REFORMS KEY TO SUSTAINED GROWTH

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NEW DELHI: India's economy is projected to grow between 6.3 per cent and 6.8 per cent in the next fiscal year, a rate that falls short of the nearly 8 per cent annual growth needed to achieve developed nation status by 2047, according to the Economic Survey tabled in Parliament by Finance Minister Nirmala Sitharaman on Friday.

The survey highlighted that while India's growth remains among the highest globally, a slowdown is evident, necessitating regulatory and policy reforms in key areas such as land and labour to sustain momentum.

Chief Economic Adviser V Anantha Nageswaran stated that rural demand, supported by improved agricultural output, easing food inflation, and stable macroeconomic conditions, could bolster short-term growth. However, he cautioned that global trade uncertainties and potential commodity price fluctuations could pose risks.

The survey noted that achieving the long-term goal of a developed economy requires boosting the investment rate to 35 per cent of GDP from the current 31 per cent. The International Monetary Fund (IMF) projects India to reach a $5 trillion economy by FY28 and $6.3 trillion by FY30, with an annual nominal growth rate of 10.2 per cent in USD terms.

The report underscored the importance Of deregulation and reducing compliance costs to enhance economic efficiency. It argued that excessive regulation hampers competition and innovation, drawing comparisons with nations such as Germany, Switzerland, Japan, and Singapore, where a robust SME sector has played a critical role in economic success. The survey recommended that states take the lead in liberalising regulatory standards and streamlining approval processes to improve the ease of doing business.