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India’s growth expected to be robust despite external headwinds: IMF
Under the baseline assumption of prolonged 50-per cent US tariffs, India’s real gross domestic product (GDP) is projected to grow at 6.6 per cent in fiscal 2025-26 (FY26) before moderating to 6.2 per cent in FY27, the IMF said.
The reform of the goods and services tax (GST) and the resulting reduction in the effective rate are expected to help cushion the adverse impact of tariffs.
Despite external headwinds, India’s growth is expected to be robust, backed by favourable domestic conditions, the IMF has said.
Assuming prolonged 50-per cent US tariffs, FY26 real GDP may grow at 6.6 per cent before moderating to 6.2 per cent in FY27.
Further deepening of geo-economic fragmentation could lead to tighter financial conditions, higher input costs and lower trade, FDI and economic growth.
Headline inflation is projected to remain well contained, reflecting the one-off effect of the GST reform and continued benign food prices, it remarked in a release.
Looking ahead, India’s ambition to become an advanced economy can be supported by advancing comprehensive structural reforms that enable higher potential growth, the IMF noted.
There are significant near-term risks to the economic outlook. On the upside, the conclusion of new trade agreements and faster implementation of structural reform domestically could boost exports, private investment and employment.
On the downside, further deepening of geo-economic fragmentation could lead to tighter financial conditions, higher input costs and lower trade, foreign direct investment (FDI) and economic growth.
Unpredictable weather shocks could affect crop yields, adversely impact rural consumption and reignite inflationary pressures, the IMF added.
Fibre2Fashion News Desk (DS)