India’s economy is projected to grow 7.4% in the financial year 2025-26 underscoring its resilience amid external uncertainties such as geopolitical tensions and global trade disruptions according to the National Statistics Office’s (NSO) first advance estimates. This robust expansion follows a 6.5% growth in FY25 reinforcing optimism among policymakers ahead of the upcoming Union Budget. Domestic Demand and Investment Drive Growth The latest estimates show that household consumption - India’s largest growth engine - is expected to rise by about 7% this fiscal keeping momentum strong despite slowing global demand. Fixed investment is also projected to strengthen growing close to 7.8% reflecting sustained business confidence. Meanwhile manufacturing output is on track to expand around 7% and the services sector is poised for double-digit expansion further anchoring domestic growth. Government expenditure is anticipated to rise by more than 5% supporting infrastructure and welfare spending. Economists point to expansive reforms introduced in recent budgets - including personal income tax cuts and rationalised Goods and Services Tax (GST) rates - that continue to stimulate private consumption and investments. Upward Revisions by Global and Domestic Institutions International and domestic agencies have consistently lifted their growth forecasts for India: The Asian Development Bank (ADB) recently raised India’s FY26 GDP forecast to around 7.2% citing strong domestic consumption and solid industrial output. Fitch Ratings has also raised its outlook anticipating growth at roughly 7.4% driven by resilient demand and structural reforms. Additionally the Reserve Bank of India (RBI) revised its projection upwards reflecting buoyant consumer spending and healthy farm output. These affirmations from multilateral and financial institutions help buoy investor confidence in India’s long-term growth story. Global Uncertainties Remain a Key Risk Despite the upbeat projections India’s external environment presents notable risks. Ongoing trade tensions and tariff impositions particularly relating to the U.S. have raised concerns about export competitiveness. Currency markets are also feeling pressure from broader capital flows and equity outflows according to recent market forecasts. Furthermore global economic slowdown and subdued demand in advanced economies could temper export-oriented sectors. Yet India’s large domestic market and structural reforms are expected to cushion these headwinds. Looking Ahead: Budget and Policy Focus With the FY27 Union Budget on the horizon in February policymakers are expected to focus on boosting productive investment enhancing export incentives and nurturing a favourable climate for private sector growth. Strengthening financial sector linkages and addressing household debt levels will also be pivotal in maintaining macroeconomic stability. As India navigates the complex global economic landscape the ability to sustain strong growth while managing external pressures remains central to its economic narrative in 2026.