India GDP Growth Forecast 2026: Major Agencies Raise Estimates

A Consensus of Confidence in India's Economy

India's economy is poised for another year of robust growth, with several prominent financial institutions and rating agencies upgrading their forecasts for the 2026 fiscal year. This wave of optimism is anchored in strong domestic demand, a resilient manufacturing sector, and supportive government policies. Despite a challenging global environment marked by uneven growth and trade tensions, India's economic fundamentals appear stable, setting the stage for continued expansion and the potential to cross the $1 trillion mark in nominal terms by March 2026.

Upward Revisions from Key Institutions

A consistent theme has emerged from recent economic outlooks: India is outperforming expectations. The Reserve Bank of India (RBI), Asian Development Bank (ADB), Goldman Sachs, Fitch Ratings, and State Bank of India's research arm have all revised their projections upwards for FY26. These upgrades follow a stronger-than-expected performance in the first half of the fiscal year, where real GDP grew by approximately 8%.

The ADB made a significant adjustment, raising its forecast by 70 basis points to 7.2%. Similarly, Fitch Ratings lifted its projection to 7.4%, while the RBI now anticipates 7.3% growth. SBI's Ecowrap report offered one of the most optimistic outlooks at 7.6%.

What's Driving the Growth Momentum?

The primary engine of this economic acceleration is strong domestic consumption. This has been supported by several factors, including recent GST rationalisation and tax cuts that have increased disposable income for households. The festive season spending in late 2025 provided a significant boost, and analysts believe this consumer confidence will persist.

Investment is another key pillar. The share of investment in the economy has risen to its highest level in 13 years. New project announcements surged by 80% in the first half of FY26, reaching ₹35.8 trillion, with the private sector accounting for a dominant 70% of this figure. This indicates a revival in private capital expenditure, which is crucial for sustained long-term growth.

Sectoral Performance: A Mixed but Positive Picture

On the supply side, the manufacturing and services sectors have been the standout performers. Manufacturing growth accelerated to 7.0% in FY26, a substantial increase from 4.5% in the previous year. The services sector, which now accounts for over half of the economy, provided the strongest momentum. Financial, real estate, and professional services expanded by an impressive 9.9%, while trade, hotels, and transport grew by 7.5%.

In contrast, the agricultural sector saw moderated growth of 3.1%, and the mining sector slipped into a slight contraction. This highlights the broad-based nature of the recovery, led by urban and industrial activity, even as the rural economy grows at a slower pace.

The Challenge of Nominal Growth

While real GDP growth, adjusted for inflation, is robust, nominal GDP growth has slowed. In FY26, nominal growth was 8%, down from nearly 10% in FY25. This slowdown is primarily due to record-low inflation. The narrowing gap between real and nominal growth presents a challenge for the government's fiscal consolidation plans. Slower nominal expansion limits revenue buoyancy, meaning that meeting deficit reduction targets will require careful expenditure management and continued efficiency gains.

Navigating External Headwinds

India's economic performance is particularly notable given the external pressures it faces. The United States has imposed significant tariffs on Indian goods, creating a headwind for exporters. A potential US-India trade deal could provide a significant upside, with some economists suggesting it could lift India's growth closer to the 8% mark.

The Reserve Bank of India also faces a complex policy environment. While easing inflation might suggest room for interest rate cuts to further support growth, the sharp depreciation of the rupee complicates this decision. The central bank must balance supporting economic momentum with maintaining currency stability.

The Road to a $1 Trillion Economy

With the economy projected to cross the $1 trillion mark by March 2026, the path to becoming a $1 trillion economy is becoming clearer. Projections from SBI Ecowrap suggest this milestone could be reached by March 2029. Looking further ahead, the IMF forecasts that India's real GDP growth will remain stable at around 6.5% from FY29 to FY31.

Conclusion: A Resilient Outlook

In summary, India enters the latter half of FY26 with strong economic momentum, supported by stable macroeconomic fundamentals and broad-based sectoral performance. The consensus among leading financial institutions points to a year of growth exceeding 7%. While challenges from global trade tensions and the need for fiscal prudence remain, the underlying strength of domestic demand and investment positions India as a standout performer in the global economy.