Growth rate of 6.3 – 6.8% for FY26 is a reasonable prospect:

Chief Economic Advisor V Anantha Nageswaran on Thursday termed India’s growth estimate of 6.3-6.8 per cent for FY26 as a “reasonable prospect” and urged industry leaders to boost capital expenditure and increase worker compensation in line with profitability growth to achieve over 6.5 per cent economic growth. Addressing the CII Annual Business Summit 2025, Nageswaran outlined several positive factors for India amidst global uncertainties. First, he noted lower energy prices. Second, he suggested that regardless of how tariff numbers play out after various international deadlines (such as 90 days from liberation day on April 2, or 90 days given to China from May 12), India might gain a tariff advantage in certain sectors where it previously did not. Third, he pointed out that monetary policy settings are more favourable for growth this year compared to 2024. Fourth, the government’s significant tax relief for the middle class is taking effect this year. Fifth, the monsoon’s progress has been favourable, with expectations of it being above average and spatially well-distributed. “If you count these positive factors to be able to achieve the growth rate that we pencilled in the Economic Survey between 6.3 per cent and 6.8 per cent and sustain it for the longer period, [it] seems like a reasonable prospect, and the International Monetary Fund agrees with us,” he said. Discussing India’s substantial domestic demand, Nageswaran highlighted that the Indian economy is primarily domestic, with private consumption accounting for 60 per cent of the GDP. To sustain this, he emphasised the need for the private sector to “take over the mantle” from the government’s capital formation efforts of the last six years, investing, hiring and compensating workers to create aggregate demand growth. This, he described, is a “virtuous endogenous circle which we need to recognise and tap into”. He acknowledged a challenge: “The growth in profitability has not only exceeded the growth in capital formation, but the growth in profitability has also trailed the growth.in compensation, which includes hiring as well, and that is something that we can ill afford for the next 25 or 30 years.”