India’s economy is on track to outpace all major G20 peers, with real gross domestic product (GDP) projected to grow 6.4% in fiscal year 2026‑27, according to a recent economic report. The robust expansion is expected to be fueled by strong domestic consumption, investment momentum, and targeted government policies, positioning India as the fastest-growing major economy among the G20.
Drivers of Growth
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Domestic Consumption
Household spending remains a key engine of growth, supported by rising incomes, increasing urbanisation, and stable inflation. Consumer demand for goods and services is expected to continue driving private-sector activity across sectors such as retail, automobiles, FMCG, and housing. -
Policy Support and Investment
Government initiatives to boost infrastructure, digital economy projects, and manufacturing competitiveness are expected to reinforce economic momentum. Policy measures aimed at enhancing ease of doing business, supporting MSMEs, and incentivising strategic sectors are likely to sustain private investment. -
Strong Export Performance
With India securing new trade agreements, including the recent India–U.S. deal, exports are expected to remain resilient. Diversified markets and tariff advantages enhance India’s position in global supply chains, particularly in textiles, gems and jewellery, machinery, and IT services. -
Sectoral Contributions
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Manufacturing and Industry: Continued expansion of the ‘Make in India’ initiative and investment in technology-driven manufacturing.
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Services: IT, business services, and digital exports contribute significantly to GDP, supported by global demand and domestic adoption of digital solutions.
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Agriculture: Modernisation, higher yields, and continued government support for farmers maintain steady growth in rural incomes.
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Global Context
Among G20 economies, India’s projected 6.4% growth stands out in contrast to slower expansions in developed nations. Rising geopolitical uncertainties, supply chain disruptions, and inflationary pressures in other economies have tempered growth elsewhere, highlighting India’s resilience and domestic demand-driven strength.
Outlook and Implications
Economic analysts see India’s projected growth as a signal of sustained domestic stability and investment potential. The expansion is expected to generate employment opportunities, increase household incomes, and strengthen fiscal revenues.
“India’s growth trajectory demonstrates the effectiveness of pro-growth policies combined with robust domestic consumption,” said a senior economist. “Maintaining macroeconomic stability while investing in infrastructure, digital economy, and manufacturing will be key to sustaining this momentum.”
With G20 peers facing slower growth, India’s economic performance is likely to attract global investors and reinforce its position as a critical engine of global demand.