Deloitte India projects GDP growth rate of 7.5-7.8% in FY26; growth stems from pro-growth policies, says economist Rumki Majumdar

Deloitte India today projected FY26 GDP growth in the range of 7.5-7.8% on the back of festive demand and robust services activity. The agency said 2025 will be remembered as the year of resilience, decisive reforms, and recalibrations in the trade policies

For 2026-27, it said growth may moderate to 6.6-6.9%, reflecting a high base and persistent global uncertainties.

India’s resilience backed by pro-growth policies: Deloitte India

 “India’s resilience is no accident. It stems from sustained pro-growth policies,” said Rumki Majumdar, Economist, Deloitte India.

“Early in 2025, signals of external risks such as unpredictable trade policies, geopolitical tensions, and slowing growth among major partners prompted decisive action. Policymakers introduced tax exemptions, policy rate cuts, and GST rationalization to boost demand. Favorable inflation trends added buoyancy, while trade recalibration through multiple FTAs strengthened exports,” she added.

2025 a year of reforms, recalibration: Deloitte India

Deloitte said fiscal policy dominated the reform agenda and tax relief led to increase in disposable income.

“The Union Budget announced long-awaited direct tax exemptions for the middle-income segment, lifting disposable incomes and reviving consumption. As global headwinds intensified, especially after U.S. tariffs hit MSMEs and labor-intensive sectors like seafood, textiles, apparel, and auto components, the government announced GST slab rationalization ahead of the festive season to offset weak exports and support the informal economy,” Deloitte said in Indian Economic Outlook.

Discretionary spending, capex surge: Deloitte India

“Rising incomes fueled discretionary spending, while public investment surged, with capital expenditure utilization reaching 58.4% up to November of FY2025-26, compared to 46.2% last year, driving gross fixed capital formation.

“Monetary policy complemented these efforts, with the RBI cutting policy rates to spur credit growth and ease liquidity. Domestic demand emerged as the economy’s primary shock absorber amid  weakening global demand,” the report added.

Major shift in India’s trade diplomacy: Deloitte India

“Trade diplomacy also saw a major shift. India signed key agreements with the UK, New Zealand, Oman, and initiated a negotiation with Israel, while the EFTA deal went operational in 2025, all aimed at diversifying export,” the report said.

“These partnerships unlock manufacturing opportunities and expand India’s services footprint beyond the U.S., while reinforcing investor confidence and paving the way for increased FDI, which remains critical for financing infrastructure and industrial expansion,” Majumdar noted.

Risks and downside pressures

The report pointed out that despite strong fundamentals, 2025 was not without challenges.

“India faced one of the highest U.S.- imposed tariffs of 50% on its exports. At the same time, geopolitical uncertainties and stalled progress on the India-U.S. trade deal triggered record FPI outflows of $18.9 billion and continued FDI repatriation. This culminated in a historic breach of ₹91 per U.S. dollar in mid-December,” it said.

Supply side reforms likely in 2026: Rumki Majumdar

 “External risks remain elevated, though their full impact may not materialize in FY2025-26. However, in FY2026-27, growth may moderate reflecting a high base and persistent global uncertainties. We anticipate the India-U.S. trade deal will conclude by the end of this fiscal, which should revive foreign investment and stabilise the currency,” said Majumdar.

 “With demand-side levers largely addressed, policy focus in 2026 will shift toward supply[1]side reforms, focusing on MSMEs, and developing tier-2 and tier-3 cities as new engines of growth,” she added.