The Indian economy will grow faster in FY26 than previously expected, with the Organisation for Economic Co-operation and Development (OECD) raising the annual forecast by 40 bps to 6.7 percent on the back of monetary and fiscal easing, along with the GST cuts.
“In India, higher tariff rates will weigh on the export sector, but overall activity is anticipated to be supported by monetary and fiscal policy easing, including the reform to the Goods and Services Tax, with growth projected to be 6.7% in 2025 and 6.2% in 2026,” the OECD said in its interim outlook, released on September 23.
The Paris-based grouping, however, is gloomier on the following year, lowering its FY27 projection to 6.2 percent from 6.4 percent.
India’s GDP growth rose by 7.8 percent in the first quarter of FY26, its fastest pace in five quarters, beating most forecasts, and policymakers expect the momentum to stay strong during the second quarter as well.
Chief Economic Advisor V Anantha Nageswaran had told Network18’s Reforms Reloaded summit on September 22 that India’s GDP growth could touch 7 percent in Q2FY26.
On the inflation front, the OECD’s assessment has offered good news, pegging the consumer prices to average 2.9 percent in FY26 - down sharply from earlier forecast of 4.1 percent and staying near 3 percent during FY27. The projection aligns with recent data showing retail inflation hovering below 3 percent for four straight months.
The global outlook seems to have turned rosier, as OECD projected world economy to grow 3.2 percent compared with 2.9 percent projected earlier. China, meanwhile, is expected to grow by 4.9 percent, while the US will grow 20 bps faster at 1.8 percent.
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