India’s real gross domestic product is expected to grow between 6.3% and 6.8% in the financial year 2025-’26, the government’s annual Economic Survey projected on Friday.

This would mean a growth rate below 7% for the second consecutive financial year.

The country’s real GDP is estimated to fall to a four-year low of 6.4% in the financial year 2024-’25, according to the government’s early estimates released by the National Statistics Office on January 7.

The Economic Survey, tabled by Finance Minister Nirmala Sitharaman in Parliament a day ahead of the Union Budget for 2025-’26, details the state of the country’s economy and suggests measures to boost growth.

Published by the Department of Economic Affairs, the survey said that navigating global headwinds requires “strategic and prudent policy management and reinforcing the domestic fundamentals”.

Chief Economic Advisor V Anantha Nageswaran said in the report that India’s economic prospects for the next financial year were balanced.

“Headwinds to growth include elevated geopolitical and trade uncertainties and possible commodity price shocks,” Nageswaran said. “Domestically, the translation of order books of private capital goods sector into sustained investment pick-up, improvements in consumer confidence, and corporate wage pick-up will be key to promoting growth.”

“Rural demand backed by a rebound in agricultural production, an anticipated easing of food inflation and a stable macro-economic environment provide an upside to near-term growth,” he added.

Retail inflation had reduced from 5.4% in the financial year 2023-’24 to 4.9% in the current financial year (till December), the report said. The decrease was largely driven by a decline in fuel price inflation, it added.

In the current financial year of 2024-’25, the growth was backed by agriculture and the services sectors, with rural demand improving because of Kharif production and favourable agricultural conditions, according to the chief economic advisor.

The manufacturing sector faced pressures because of domestic seasonal conditions and weaker global demand, the report said.

The Reserve Bank of India had said on December 30 that India’s economy was demonstrating resilience and stability, and projected GDP growth at 6.6% in 2024-’25. The central bank said that the growth was aided by a revival in rural consumption, among other factors.

On January 16, the World Bank forecast that India’s economic growth was projected to grow at a rate of 6.7% over the next two financial years.

The World Bank said that India’s services sector is expected to expand sustainably. Manufacturing activities would strengthen, supported by government initiatives aimed at improving the business environment, it added.

The International Monetary Fund said on January 10 that the Indian economy is likely to be “a little weaker” in 2025 despite steady global growth.

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