India's GDP Forecast Hits 7.6%
India has revised its GDP growth projection for FY26 up to a strong 7.6%, outpacing most major economies. Prime Minister Modi stated that developed nations are now "knocking at India’s door" for trade deals, citing a strengthened economy and controlled inflation.
The robust GDP forecast follows a strong performance in the preceding fiscal year, with India's economy growing at 7.2% in 2023-24. This momentum is attributed to significant activity in the manufacturing and construction sectors. The manufacturing sector, in particular, has been a primary driver of this economic resilience, registering double-digit growth in the 2023-24 and 2025-26 fiscal years. A key pillar of this growth is a substantial increase in government capital expenditure, particularly in infrastructure. For the 2025-26 fiscal year, the government has allocated ₹11.21 lakh crore (approximately $128.64 billion) for infrastructure development, representing 3.1% of the GDP. This public investment is intended to "crowd in" private investment and is focused on projects like the National Infrastructure Pipeline and the PM Gati Shakti National Master Plan to improve logistics and connectivity. Private equity and venture capital investments are also seeing a resurgence, with inflows rebounding by approximately 9% in 2024 to reach around $43 billion. This has positioned India as the second-largest destination for private equity and venture capital in the Asia-Pacific region. Sectors like financial services, e-commerce, and technology are attracting significant investor interest. On the monetary front, the Reserve Bank of India (RBI) has maintained a stable policy environment. In its February 2026 meeting, the Monetary Policy Committee kept the repo rate unchanged at 5.25%, adopting a neutral stance. This decision was supported by a benign inflation outlook, with the Consumer Price Index (CPI) inflation for January 2026 at a moderate 2.74%. This strong economic performance is attracting foreign capital, with foreign direct investment (FDI) showing a strong positive correlation with GDP growth. The improving economic fundamentals are expected to make Indian equities more attractive to foreign institutional investors. The Indian stock markets have reflected this positive sentiment. In the calendar year 2025, the benchmark Nifty 50 index gained 10.5%, while the BSE Sensex rose by 9%. This marked the tenth consecutive year of gains for the Indian markets, with analysts anticipating stronger returns in 2026, supported by improving corporate earnings and steady economic growth.
