New Delhi, Dec 11 (UNI) Indian economy is projected to register a growth rate of 6.4 per cent in 2026, supported by continued public spending, private investments and a weakening dollar, said a UN Trade and Development (UNCTAD) in a report released on Thursday.
UNCTAD is a UN body focused on integrating developing countries into the global economy by maximizing their trade, investment and growth opportunities. This institution acts as a focal point for issues like finance, technology and sustainable development.
The report noted that complex debt dynamics burdened smaller economies like Bangladesh, Pakistan and Sri Lanka. These countries are also struggling under the International Monetary Fund (IMF)’s Extended Fund Facility programme.
The ‘Extended Fund Facility or EFF’ programme is designed with an aim to provide financial assistance to countries facing serious medium-term balance of payments problems because of structural weaknesses in their economies that require time to address.
On the other hand, India has been the world’s fastest-growing major economy since 2021 and is estimated to expand 6.4 per cent in 2025 through continued elevated public capital expenditure, easing financing conditions and declining inflation.
UNCTAD report applauded India’s fiscal policy, as the govt targets to achive a public deficit of 4.4 per cent of Gross Domestic Product (GDP) over the current fiscal year, amid the tax cuts and corporate tax rebates.
In August, S&P Global upgraded the sovereign credit rating from ‘BBB negative’ to ‘BBB’ citing robust fundamentals, disciplined fiscal governance, improved policy frameworks and market dynamics.
This upgrade bolstered investor confidence, although tariff policy changes affected the enthusiasm.
Regarding the monetary policy changes, UNCTAD noted that the RBI initiated cuts to the repo rate in 2025; it remained unchanged at 6.5 per cent for several years before being cut by 100 basis points between February and October, 2025.
Inflation is likely to hover around 4 per cent in 2025 and remain in the RBI’s target band of 2-6 per cent. Shedding light on external factors, the report noted that tariffs imposed by the United States impacted some sectors like manufacturing, apparel and electronics, which potentially shaved up to 0.3 percentage points from GDP growth.
Capital markets maintained resilience throughout the year as domestic institutional investors have compensated for most foreign outflows.
