India's Economy Poised for Robust 7.3-7.5% Growth in FY26: Grant Thornton
Overview
Consultancy firm Grant Thornton Bharat projects India's GDP to expand between 7.3% and 7.5% for the fiscal year ending March 2026, retaining its status as the world's fastest-growing major economy. The outlook, driven by services and manufacturing strength, anticipates a slight moderation to around 7% in FY27, while acknowledging geopolitical risks and supply chain challenges. The firm also expects a potential final 25 basis point repo rate cut.
India's economy is set for strong expansion, with consultancy firm Grant Thornton Bharat forecasting a Gross Domestic Product (GDP) growth rate of 7.3% to 7.5% for the fiscal year ending March 2026. This projection positions India to remain the world's fastest-growing major economy. A subsequent slight slowdown to approximately 7% is anticipated for the 2026-27 fiscal period.
These forecasts align closely with the National Statistics Office's (NSO) First Advance Estimates, which project India's GDP growth at 7.4% for 2025-26. The robust performance is largely attributed to significant contributions from the services and manufacturing sectors. Despite global headwinds, including U.S. tariffs on Indian imports and geopolitical tensions in regions like South America and the Middle East, exports are reported to be holding firm.
Economic Outlook and Risks
Rishi Shah, Partner and Economic Advisory Services Leader at Grant Thornton Bharat, highlighted that the current fiscal year's growth is expected to be within the 7.3%-7.5% range, with 2026-27 figures potentially settling between 6.7% and 7%. Shah identified external factors, particularly geopolitical developments and their impact on supply chains, as significant pressure points for the economy. He emphasized the importance of India participating in the global trend of re-industrialization, noting that advanced economies are currently undergoing such a shift.
Policy and Currency Expectations
Looking ahead to the Union Budget, Shah suggested the government's directional document should prioritize the ease of doing business. Regarding currency, he anticipates the Indian Rupee to stabilize around the ₹90 mark against the U.S. dollar. Shah also posited that a slightly weaker currency serves India's interests, given its import-heavy nature for essential goods.
Monetary Policy Stance
Grant Thornton Bharat also believes the Reserve Bank of India (RBI) has room for one more monetary policy adjustment. With inflation remaining within or below the central bank's target range of 4%-6%, Shah sees a case for an additional 25 basis point cut in the repo rate. The RBI has already reduced its key lending rate by 125 basis points since February of the previous year, bringing it to 5.25%. The Monetary Policy Committee's next meeting is scheduled from February 4 to 6.
