CEA V Anantha Nageswaran Predicts Economic Growth Could Surpass 7%, GDP Expected to Exceed $4 Trillion by FY26
Backed by robust second-quarter performance, Chief Economic Adviser V Anantha Nageswaran announced on Friday that India’s economy is on track to grow by over 7% this fiscal year. He projected that the country’s GDP will surpass the $4 trillion mark by FY26, following a strong GDP growth rate of 8.2% in Q2. This growth is attributed to a surge in manufacturing and services, despite slower agricultural performance. Nageswaran emphasized that the current economic trajectory supports these optimistic forecasts.
India’s economy recorded an impressive 8.2% GDP growth in the second quarter, marking a six-quarter high. This growth was primarily driven by a significant increase in manufacturing and a robust expansion in the services sector. The government’s recent reduction in the Goods and Services Tax (GST) has played a crucial role in bolstering factory output, effectively counterbalancing the slower growth observed in agriculture. Nageswaran noted that the first half of the financial year has already achieved a real GDP growth rate of 8%, allowing for a confident projection of full-year growth to be at least 7% or higher.
The positive economic indicators extend beyond GDP figures. GST collections from April to October 2025 grew by 9%, reflecting strong consumer demand and improved compliance. Additionally, corporate balance sheets are reportedly in good shape, paving the way for increased private investments in the latter half of FY26. Rural demand remains robust, supported by favorable crop yields and rising incomes, with tractor sales in October reaching an 11-year high.
Inflation Stability and Structural Reforms
Nageswaran highlighted that core inflation remains stable, which is crucial for maintaining economic momentum. Healthy reservoir levels and timely sowing of Rabi crops contribute to a positive outlook for food prices. The Chief Economic Adviser pointed out that various structural reforms, including the Labour Codes, GST rationalization, and the new personal income tax regime, are enhancing the ease of doing business in India. These reforms are expected to boost productivity and competitiveness across sectors.
The combination of stable inflation, sustained public capital expenditure, and ongoing reform initiatives positions the Indian economy to effectively navigate potential risks. Nageswaran noted that several agencies have revised their GDP growth projections for FY26 upward, reflecting growing confidence in the economy’s resilience and growth potential.
Future Outlook and Consumer Confidence
Looking ahead, Nageswaran expressed optimism about the trajectory of India’s economy. He indicated that the momentum observed in manufacturing and services, along with the benefits of GST-led gains, will continue to support growth. As consumer confidence strengthens, aided by improving price trends and tax reforms, consumption is expected to rise further.
The Chief Economic Adviser also pointed out that the current economic environment is conducive to a pick-up in private investments, particularly in the second half of FY26. With rural demand holding steady and retail sales of two- and three-wheelers experiencing significant growth, the overall economic outlook remains positive. The government’s focus on reforms and infrastructure development is likely to sustain this growth momentum, ensuring that India remains on track to achieve its ambitious economic goals.
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