India’s FY26 growth to outpace IMF forecast, projected at up to 6.8%: Fin Secy

NEW DELHI : Finance Secretary Ajay Seth stated on Friday that India’s Economy is likely to grow between 6.3 per cent and 6.8 per cent in 2025-26, with actual growth probably settling near the middle of that range.

This projection exceeds the International Monetary Fund’s (IMF) forecast of 6.2 per cent. Seth’s growth estimate aligns with the Economic Survey’s earlier forecast for FY26.

However, this comes at a time when several multilateral agencies have reduced their growth projections for the Indian economy.

Last month, the IMF lowered its FY26 economic growth forecast for India from 6.5 per cent to 6.2 per cent, citing potential trade risks stemming from the US’s global tariff war.

The United States recently announced a 27 per cent reciprocal tariff on Indian goods, pointing to India’s average 52 per cent duty on US imports.

This measure is part of a broader American strategy to address trade imbalances and protect domestic industries. The US has temporarily reduced this tariff to 10 per cent, providing some relief to India and other trading partners.

Despite the positive growth outlook, Seth emphasised that India’s public debt remains elevated and must be reduced through sustained fiscal consolidation.

“One must remain committed to fiscal consolidation for two key reasons,” Seth said, noting that high public debt is a major factor in credit rating agencies’ cautious view of India.

“They believe our capacity to withstand another crisis on the scale of COVID-19 is limited at this point,” he added.

Seth also pointed out that India’s interest payments as a proportion of tax revenue are relatively high compared to countries like Indonesia, which holds a better credit rating.

The Union government has criticised global credit rating agencies for undervaluing India’s sovereign rating despite the country’s strong growth, reforms, and macroeconomic stability.

Despite India’s consistent GDP growth, large foreign exchange reserves, a stable financial system, and political stability, the country continues to receive a sovereign credit rating just above the investment grade, according to the Centre’s arguments.