Indian Economy to Witness 6.8% Growth in 2025-26, Supported by Strong High-Frequency Indicators

New Delhi: The Indian economy is projected to grow at a robust 6.8% in the financial year 2025-26, according to a Bank of Baroda forecast. The report anticipates nominal GDP growth of around 10.5% next year, driven by high-frequency indicators such as strong air passenger traffic, a rise in services PMI, and increased GST collections.

Higher rabi crop sowing is expected to further bolster agricultural growth, providing a solid foundation for the economy.

Despite a slowdown in 2024-25, the Indian economy has shown resilience, with strong festive demand and steady economic activity. This resilience is reflected in the third-quarter uptick in key indicators.

The report predicts that both private and government consumption will register strong growth in FY25, with private consumption at 7.3% (up from 4% in FY24) and government consumption at 4.1% (up from 2.5% in FY24). Export growth is also expected to pick up, rising 5.9% in FY25 compared to 2.6% in FY24.

The report also highlights the potential for higher agricultural growth and increased government expenditure in the second half of 2024-25, which will drive economic momentum.

However, risks from global headwinds, such as a possible tariff war under the incoming US administration, could impact global trade and economic stability. The report stresses that the imposition of protectionist trade policies by the new US president could disrupt international trade, posing risks to global growth.

Domestically, attention will shift to key events, including the Union Budget, corporate performance, and RBI monetary policy decisions.

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