India GDP Growth Forecast 2025 2026 | Supported by robust growth in private consumption on the back of sustained macroeconomic and financial stability, India’s real GDP is expected to grow at 6.5 percent in 2024/25 and 2025/26, the International Monetary Fund said Thursday on the conclusion of its annual consultations with India.
“Real GDP is expected to grow at 6.5 percent in 2024/25 and 2025/26, supported by robust growth in private consumption on the back of sustained macroeconomic and financial stability,” the IMF said in a media statement.
Observing that headline inflation is expected to converge to the target as food price shocks wane, IMF said the current account is expected to widen somewhat but remain moderate at -1.3 percent of GDP in 2025/26.
“Looking ahead, India’s financial sector health, strengthened corporate balance sheets, and strong foundation in digital public infrastructure underscore India’s potential for sustained medium-term growth and continued social welfare gains,” said the world body.
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In a statement issued after its annual consultations with India, the IMF said that despite recent moderation, India’s economic growth has remained robust, with GDP growth of 6 percent y/y in the first half of 2024/25. Inflation has broadly declined within the tolerance band, though food price fluctuations have created some volatility, it said.
The financial sector has remained resilient, with non-performing loans at multi-year lows, the IMF said, adding that fiscal consolidation has continued, and the current account deficit has remained well contained, supported by strong growth in service exports.
According to the IMF, risks to the economic outlook are tilted to the downside. Deepening geoeconomic fragmentation could affect external demand, while deepening regional conflicts could result in oil price volatility, weighing on India’s fiscal position.
Domestically, private consumption and investment recovery may be weaker than expected if real incomes do not recover sufficiently. Weather shocks could adversely impact agricultural output, lifting food prices and weighing on the recovery in rural consumption. On the upside, deeper implementation of structural reforms could boost private investment and employment, raising potential growth, it said.
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IMF Directors said India’s strong economic performance provides an opportunity to advance critical and challenging structural reforms to realize India’s ambition of becoming an advanced economy by 2047.
Commending the authorities’ commitment to fiscal prudence, IMF Directors welcomed the adoption of a debt target as the medium-term fiscal anchor, which has enhanced transparency and accountability.
“Given significant development and social needs, Directors recommended continued, well-calibrated fiscal consolidation over the medium term to rebuild buffers, ease debt service, and reduce debt. They suggested a greater focus on domestic revenue mobilization, which together with current expenditure rationalization, such as better targeting of subsidies, can create space for growth-enhancing expenditure on infrastructure and health,” said the IMF statement.
