Mumbai, Oct 28 : The Finance Ministry, in its latest Monthly Economic Review for September, reaffirmed India’s strong growth prospects for FY26 despite mounting global uncertainties.
According to the Department of Economic Affairs, the economy is poised for steady expansion, supported by robust domestic demand, favourable monsoon conditions, easing inflation, and ongoing monetary support.
“The implementation of various growth enhancing structural reforms and government initiatives, including GST 2.0, is expected to mitigate some of the negative impacts of these external challenges,” the review stated.
The Ministry noted that economic activity in Q2 FY26 displayed “steady upward trends,” even as the United States imposed higher tariffs on Indian goods in August.
It emphasised that the government’s focus on structural reforms, deregulation, and innovation has made the Indian economy more resilient to external shocks. “These initiatives are expected to have a positive multiplier effect on economic activity, supporting domestic demand and sustaining growth momentum,” the report said.
However, the Ministry cautioned that rising geopolitical tensions, trade policy uncertainty, and potential protectionist measures remain key downside risks. The Trade Policy Uncertainty (TPU) Index surged 386.4 per cent year on year in Q3 2025 the second-highest level since 1960 reflecting persistent volatility in the global trade environment.
On a positive note, the report highlighted that both the World Bank and the International Monetary Fund (IMF) have revised India’s growth forecasts upward. The World Bank now projects GDP growth at 6.5 per cent for FY26 (up from 6.3 per cent in June), while the IMF expects 6.6 per cent, citing a “strong first quarter” that offset the impact of the US rate hike.
The Finance Ministry reiterated its confidence that India’s macroeconomic fundamentals remain solid and that continued policy reforms will keep the economy on a stable and sustainable growth trajectory through FY26.