UNITED NATIONS, Apr 21: India’s economic momentum is expected to remain steady despite global headwinds, with the United Nations projecting a growth rate of 6.4 per cent in 2026 and a further rise to 6.6 per cent in 2027. The latest assessment highlights the country’s resilience, supported by strong domestic consumption and structural economic drivers.
According to the Economic and Social Survey of Asia and the Pacific 2026 released by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), India continues to anchor growth across the South and South-West Asian region. Regional economies recorded a combined growth of 5.4 per cent in 2025, slightly higher than 5.2 per cent in the previous year, largely propelled by India’s robust performance.
Domestic Demand Drives Expansion
India’s economy registered a notable 7.4 per cent growth in 2025, reflecting strong consumer demand, particularly in rural areas. Increased spending, coupled with policy measures such as adjustments in goods and services tax rates, contributed significantly to this expansion. Additionally, exporters accelerated shipments ahead of tariff changes in the United States, temporarily boosting trade activity.
However, the report noted a moderation in economic activity during the latter half of 2025. This slowdown was partly attributed to a sharp 25 per cent decline in exports to the US following the imposition of steep tariffs in August 2025. Despite this setback, the services sector remained a cornerstone of growth, continuing to sustain overall economic momentum.
Inflation and External Pressures
Inflation in India is projected to remain stable, with estimates of 4.4 per cent in 2026 and 4.3 per cent in 2027. The relatively controlled inflation outlook reflects balanced demand conditions and policy measures aimed at maintaining price stability.
At the same time, external challenges persist. Foreign direct investment (FDI) flows into developing economies in Asia and the Pacific have weakened due to ongoing geopolitical tensions and trade uncertainties. While global FDI rose by 14 per cent, the region experienced a 2 per cent decline in 2025.
Despite this trend, India remains one of the top destinations for greenfield investments. Alongside countries such as Australia, the Republic of Korea, and Kazakhstan, India attracted significant investment commitments, underscoring its strategic importance in global supply chains and emerging industries.
Remittances Cushion Households
Remittances continue to play a vital role in supporting household consumption across the region. India, the world’s largest recipient of remittances, recorded inflows of approximately USD 137 billion in 2024. A substantial portion of these funds is used for essential expenses, including healthcare and daily living costs.
However, new policy changes in the United States, including a 1 per cent tax on remittances introduced in January 2026, could pose challenges. This measure may reduce inflows and impact household spending, particularly among lower income groups dependent on overseas earnings.
Green Economy and Job Creation
The report places strong emphasis on the growing importance of the green economy. Estimates from the International Renewable Energy Agency indicate that global green jobs reached approximately 16.6 million, with steady annual growth over the past decade.
India accounts for around 1.3 million of these jobs, reflecting its expanding role in renewable energy and sustainable industries. Governments across the region are increasingly leveraging the energy transition to create new economic opportunities and strengthen industrial capabilities.
India’s production-linked incentive (PLI) scheme has been highlighted as a key policy initiative. By encouraging domestic manufacturing in sectors such as solar photovoltaics, battery storage, and green hydrogen, the scheme aims to reduce import dependence while fostering innovation and employment.
Policy Momentum for Sustainable Growth
The survey underscores the importance of targeted industrial policies and public investment in accelerating clean technology adoption. Across Asia-Pacific economies, governments are scaling up efforts to build renewable infrastructure, support energy storage solutions, and develop green industrial clusters.
India’s approach, combining macroeconomic stability with forward-looking industrial strategies, positions it as a major player in the global energy transition. The focus on sustainability is expected to not only drive long-term growth but also create a broad base of economic beneficiaries.
Outlook Ahead
While global uncertainties, including trade tensions and shifting investment patterns, continue to pose risks, India’s economic fundamentals remain strong. The combination of domestic demand, a resilient services sector, and proactive policy measures is likely to sustain growth in the coming years.
The UN report ultimately paints a picture of cautious optimism highlighting India’s ability to navigate external shocks while steadily advancing towards a more diversified and sustainable economic future.