IMF Projects 6.6% Growth For India In FY26 Despite US Tariffs

(MENAFN- KNN India) New Delhi, Nov 27 (KNN) India's economy is expected to grow 6.6 per cent in 2025–26 despite prolonged US tariffs, according to the International Monetary Fund (IMF).

It noted that the recent Goods and Services Tax (GST) reforms and a lower effective tax rate will help soften the impact of the 50 per cent US duties, which include a 25 per cent levy linked to India's Russian energy purchases.

The IMF highlighted that India continues to show strong momentum, with GDP rising 7.8 per cent in the first quarter of FY26 after 6.5 per cent growth in FY25. Growth is expected to moderate to 6.2 per cent in FY27 if tariffs persist, reported PTI.

The Fund cautioned that global fragmentation, higher input costs, tighter financial conditions, or adverse weather could weigh on growth and rural demand. On the upside, new trade agreements and faster domestic reforms could support exports, investment and jobs.

The IMF highlighted that India's financial and corporate sectors remain robust, with healthy capital buffers and historically low Non-Performing Assets (NPAs). It added that fiscal consolidation is on track, while steady service exports continue to keep the current account deficit contained.

IMF Directors praised India's macroeconomic management but called for sustained structural reforms to support the country's long-term growth ambitions.

They stressed the need for disciplined spending, targeted tariff relief, stronger revenue mobilisation, and continued efforts to boost human capital, labour participation, and trade integration.

They highlighted the need to deepen trade integration, boost R&D and innovation, and accelerate the green transition through greater access to concessional financing.

India's financial system remains sound, the IMF noted, but it advised authorities to closely monitor risks in non-bank financial institutions and advance financial sector reforms.
(KNN Bureau)

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