India's economy is projected to grow by 6.5% for the fiscal year 2025-26, despite global trade uncertainties.

This growth follows a GDP increase of 5.6% in the second quarter and a rise to 6.2% in the third quarter of the financial year.

The Reserve Bank of India (RBI) emphasizes that India's structural strengths, including sound fiscal policies and digital transformation, provide a solid foundation for long-term growth.

The finance ministry highlights the importance of private sector investment to further boost the economy, relying on India's steady growth outlook.

Changes to the personal income tax structure are expected to increase disposable incomes for the middle class, enhancing consumption.

Current labor market conditions are stable, with optimism in hiring practices indicated by employment outlook surveys.

Positive trends in agricultural production are contributing to food inflation, with retail inflation easing to 3.6% in February 2025.

This decrease in headline inflation is attributed to reduced vegetable prices, although core inflation has risen to 4.1%.

However, ongoing tariff wars pose a threat to exports from emerging economies like India, which rely heavily on exports for domestic growth.

A warning from India's finance ministry indicates that geopolitical tensions and trade uncertainties could present risks to global growth in 2025.

In contrast, the US real GDP growth for the first quarter of 2025 is projected at -2.1%, indicating a declining economic outlook that will affect global GDP growth.

Despite these challenges, the positive outlook for commodity prices and domestic private sector investment are identified as key drivers of growth in FY26.