Quite Satisfied with Economy's Response to Global Events; GDP Growth to be near 7 % in FY26: CEA

Chief Economic Advisor V Anantha Nageswaran on Wednesday said the Indian economy has responded quite satisfactorily to global headwinds, and exuded confidence that real GDP growth is likely to touch 7 % in FY26.

Speaking at the India Maritime Week here, Nageswaran said three global rating agencies have recently upgraded their ratings on India, and if the country continues on the same track, India can "soon" break into the 'A' rating category.

The academic-turned-policy advisor said the resilience shown by the economy, coupled with measures by the government and the Reserve Bank of India (RBI), places the Indian economy in a "comfortable position".

"We should be quite satisfied with the way the Indian economy has responded to global uncertainties this year, and the tariff-related developments as well," he said.

The policy measures, including relief in income tax and the recent GST rationalization "have combined to improve the economic growth prospects for this year to near or around 7 % in real terms for FY26", he added.

In February, Nageswaran had estimated that real GDP growth may fall to as low as 6.3 % for FY26, and the US’ tariff moves led them to further revise their expectation down to 6 %.

"But the resilience of the economy, the timely policy measures taken to boost demand have actually placed us in a very comfortable position," he added.

Replying to the critique of sluggish bank credit growth, he said one must look at the total resource mobilization in the economy, including the money raised through non-bank lenders, commercial paper, certificate of deposits, equity markets etc, to arrive at a conclusion.

Citing RBI data, he said the total resource mobilization in the economy has increased by 28.5 % per annum over the last six years.

The comments come at a time of widespread concern about sluggish growth in private capital expenditure. Nageswaran asserted that the RBI has cut rates and undertaken liquidity measures to ensure that there is "ample funds availability" in the economy.

Pointing out that three rating agencies, including Standard & Poor's, have upgraded the sovereign ratings in the recent past, Nageswaran said that if the country stays on this track, India will "soon move into A status", which has the potential to further bring down the overall cost of capital.

"it will be our endeavour from the government to continue to adhere to fiscal prudence, fiscal stability, low inflation and therefore low borrowing cost for the industry as well," he said, adding that India has been able to increase the per capita income without accumulating debt.

Broader themes dominating the global landscape over the next 20 years will not be the same as those of the last 40 years, which saw greater market integration and predictability, he said, adding that the future will be full of fragmentation, less predictable, and jostling for market share.

"When the rising tide will not be lifting all boats, the boats that are well-prepared and well-equipped will be the ones that will be able to navigate not only the rising tide but also the volatile waves," the economic policymaker said at the maritime conference.

He said the Indian maritime industry also faces the same challenges as the broader Indian economy, including sourcing raw materials such as steel, infrastructure gaps, talent shortages, technology gaps, and cost disadvantages.

The key to wading through these is to continue with policy reforms and deregulation, he said, underlining that the government of India has not been "squeamish" about providing financial support to the maritime sector.

Speaking at the same event, International Financial Services Centres Authority chairman K Rajaraman said the authority expects the shipping, ports, and maritime industry's fund requirements to exceed $ 300 billion and pointed out that GIFT City can be a good alternative for raising the funds.