India's economic landscape continues to show resilience and robust growth, with the International Monetary Fund (IMF) upgrading its GDP growth forecast for the country. The IMF has increased India's growth projection for the fiscal year 2025-26 (FY26) to 6.6% from an earlier estimate of 6.4%. This upward revision is primarily attributed to strong economic momentum observed in the first quarter, which has effectively mitigated the impact of US tariffs on Indian goods. India is now projected to be the fastest-growing major economy among advanced economies, emerging markets, and developing countries for both the current and next fiscal years. However, the IMF has slightly lowered its forecast for FY27 (2026-27) to 6.2% from 6.4%.
Domestically, the Indian economy recorded an impressive 7.8% growth in the April-June quarter (Q2 FY25), marking a five-quarter high. This growth was largely propelled by strong private consumption and significant expansion in the services sector, which grew at a two-year high of 9.3% year-on-year. The manufacturing sector also exhibited strength, achieving a five-quarter high growth of 7.7% year-on-year during the same period. Healthy domestic consumption, supported by easier credit conditions following a 1% reduction in policy rates and resilient rural demand due to a strong harvest, has been a key driver. Furthermore, slowing food inflation, expanded welfare spending, and a modest boost to urban incomes from tax cuts are expected to sustain household spending through the second half of 2025.
The banking sector is also experiencing positive developments. Public Sector Banks (PSBs) are reportedly outperforming private lenders in credit growth, a trend attributed to improved risk assessment, enhanced credit underwriting standards, and better monitoring of project loans. Financial Services Secretary M Nagaraju noted that customers are returning to PSBs due to their renewed focus on efficiency, transparency, and trust. PSBs are encouraged to continue their robust support for Micro, Small, and Medium Enterprises (MSMEs) and startups, recognized as crucial drivers of India's economic growth. In other financial news, retail inflation eased to an eight-year low of 1.54% in September, and wholesale inflation also declined to 0.13% in the same month, strengthening the case for potential repo rate cuts by the Reserve Bank of India. Net direct tax collection has seen a 6.3% increase, reaching ā¹11.89 lakh crore till October 12 in FY26.
In the business and investment landscape, significant developments include Google's announcement to invest $15 billion in India's largest AI Data Centre in Vizag. Vedanta has received approval from the Competition Commission of India (CCI) to acquire Jaiprakash Associates for ā¹17,000 crore. Financial technology firm Tide is set to invest $676.36 million in India, aiming to create over 800 new jobs and serve 800,000 SMEs. The Indian real estate sector has attracted substantial foreign investment, with $10.2 billion in inflows recorded so far in 2025. Additionally, the India-EFTA trade pact is anticipated to boost investments by $100 billion and generate one million jobs.
On the market front, Indian stock indices experienced a decline for the second consecutive day due to global investor unease stemming from US-China tensions. Conversely, precious metals like gold reached new all-time highs, with prices hitting ā¹1.3 lakh per 10 grams in Delhi and exceeding $4,100 per ounce globally, attracting safe-haven investments. LG Electronics India made a notable debut on the NSE, surging 50% and becoming more valuable than its South Korean parent company. Meanwhile, Tech Mahindra reported a 4.4% year-on-year fall in consolidated profit after tax (PAT) for Q2, despite a 5% rise in revenue. Axis Bank's Q2 profit is projected to fall by 19% year-on-year due to persistent margin and cost pressures.