According to the 2024-25 Economic Survey, India is projected to remain the fastest-growing economy among G20 nations in 2026 with a growth rate of 6.4 per cent, driven by resilient banking, strong balance sheets and significantly improved asset quality.
This robust performance is expected to be supported by strong domestic consumption, eased business regulations and sustained policy backing. The survey also notes that inflation has moderated and is likely to remain within the target range in the coming period.
The survey has revised India’s potential growth rate upward to a range of 6.8–7.2 per cent for the fiscal year 2027. Growth is expected to be further bolstered by strong investor confidence in the private sector, particularly following key trade agreements with the United States and the European Union.
While the India-US trade deal is anticipated to be implemented swiftly, the India-EU agreement remains subject to the passage of a Bill that will later be tabled in the European Parliament. The survey highlights significant improvement in the banking sector, with a sharp decline in non-performing assets (NPAs). It highlights the sector’s strength and resilience in supporting economic activity across industries.
In addition to strong domestic fundamentals, India is well-positioned to manage external challenges with ample foreign exchange reserves providing a substantial buffer amid global uncertainties. However, the survey cautions that geopolitical tensions, global financial volatility and climate-related risks continue to pose potential headwinds.
The banking sector has shown remarkable improvement with gross and net NPAs falling to multi-year lows, supported by stronger balance sheets, higher profitability and enhanced asset quality. Stress tests indicate that banks remain well-equipped to withstand potential shocks.
Experts note that the strong performance of the banking sector and record profits reflect growing investor confidence with capital increasingly flowing into the stock market rather than traditional fixed-deposit schemes.
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