NEW DELHI, Oct 27 (UNI) In its latest monthly economic review for September, the Finance Ministry maintained a strong growth outlook for FY26 amid uncertain global conditions.
It said the growth will be supported by a positive demand outlook due to GST reforms, favourable monsoons, lower inflation, and monetary easing.
However, the report cautioned that global uncertainties will continue to affect external demand, presenting downside risks to the growth outlook.
The review by the Department of Economic Affairs in the Ministry of Finance said, “The implementation of various growth-enhancing structural reforms and government initiatives, including GST 2.0, is expected to mitigate some of the negative impacts of these external challenges.”
The steady upward trends were visible in Q2 FY26, the Finance Ministry said. “This is particularly significant, as the United States imposed higher tariffs on India in August,” the review noted.
The Finance Ministry highlighted that the government has been focused on making the Indian economy resilient to external vulnerabilities through structural reforms and initiatives to promote research and innovation.
“These initiatives and the government’s continued efforts in deregulation are expected to have a positive multiplier effect on economic activity, supporting domestic demand and sustaining growth momentum,” the review noted.
The report warned that the rising geopolitical tensions and the potential reintroduction of protectionist measures in response to global overcapacity serve as headwinds to trade growth, even as India continues to show strong economic momentum.
Trade policy uncertainty has reached unprecedented levels. The Trade Policy Uncertainty (TPU) Index surged 386.4 per cent year-on-year in Q3 2025 — the second-highest reading since 1960, underscoring volatility in global trade policy, it noted.
Although the index fell 32 per cent quarter-on-quarter as negotiations advanced and supply chains adjusted, the report cautions that the global trade environment remains fragile.
The World Bank also increased India’s FY26 GDP forecast to 6.5 per cent from 6.3 per cent in June. Further, the International Monetary Fund (IMF) also raised the GDP growth forecast for FY26 by 20 basis points (bps) to 6.6 per cent, citing a “strong first quarter” that more than offset the impact of the US rate hike.
