Growth outlook: Reforms needed to sustain economic growth

THE International Monetary Fund’s latest update raising India’s growth forecast to 6.6% for 2025-26 reinforces the country’s position as one of the world’s fastest-growing major economies. The revision reflects resilient domestic consumption, strong services exports and steady public investment. But beneath this optimism lies the reality of an uncertain global landscape — one marked by trade disruptions, US tariff escalations and tightening financial conditions that could test India’s economic momentum. The IMF’s confidence in India stems largely from its robust domestic market and reform measures aimed at improving fiscal discipline and industrial competitiveness. Infrastructure spending, digital transformation and improved tax collections have strengthened macroeconomic fundamentals. However, exports, particularly in manufacturing, remain vulnerable to protectionist policies and weakening global demand. With China’s slowdown and western economies recalibrating supply chains, India has both a challenge and an opportunity: to build self-reliance while staying integrated in global trade.

The government’s emphasis on manufacturing through ‘Make in India’, coupled with targeted incentives for electronics, semiconductors and green technologies, could help widen the country’s industrial base. But sustaining growth beyond short-term consumption requires deeper structural reforms in labour markets, land acquisition and ease of doing business. Inflation control, agricultural productivity and employment generation must also stay at the centre of the policy agenda.

India’s economic story today is one of cautious confidence. The resilience of its domestic economy has shielded it from many external shocks, but complacency could erode that advantage. For long-term stability, India must invest in human capital, productivity and innovation while maintaining fiscal prudence. Growth is meaningful only when it is inclusive and capable of lifting millions, not just boosting macro indicators. India must reform to ensure that its economic voyage stays steady.