India to reap reform rewards after turbulent year

NEW DELHI: The Indian economy enters 2026 under the shadow of global trade tensions and geopolitical shifts but swift reform measures have laid the foundation for it to weather the global challenges on the back of robust growth.

The nearly $4-trillion economy has managed to navigate the global storm deftly with growth now expected to be over 7% in the current financial year that ends in March. Several multilateral agencies, brokerages and economists have revised upwards their growth estimates for this year after the scorching 8.2% expansion in the three months to Sept. The focus in the New Year will be on sustaining the growth momentum and perhaps accelerating it to align with the goal of emerging as a developed country by 2047.

The resolution of the US tariffs issue, expected in early 2026, could pave the way for faster growth, more exports and also improve the investment climate in Asia's third-largest economy.




In the closing months of 2025, several global tech giants such as Amazon, Microsoft unveiled mega investment plans, including data centres, helping improve the mood in the economy, which had been soured by the prolonged tussle between New Delhi and the US over the Trump tariffs imposed on India for buying Russian oil.

Inflation has remained benign, helping the central bank to ease rates to support growth. Price pressures are expected to remain soft for now while moderate global crude oil prices lend support to the economy, which imports nearly 80% of its crude oil.

Eyes On Budget:

There are expectations that the Budget in Feb could also unveil several reform measures to improve "ease of doing business" in the country as well as cutting red tape in several sectors. Govt has already unleashed several big ticket reforms such as the new labour codes, GST rate rationalisation and a revamped income tax law.

Experts reckon that this reform momentum, which has helped blunt some of the impact of the global trade turmoil, will have to be sustained to shield the economy and protect growth.

"The year 2025 brought about a lot of challenges for India. Be it trade tariffs or geopolitical conflicts, India turned turbulence into transformation by bringing in reforms, and building new trade and investments relationships through the year.

The efforts resulted in India growing at 8% in the first half of FY26. India's playbook of reforms and trade recalibration helped India remain resilient amid global uncertainty," said Rumki Mazumdar, economist at consulting firm Deloitte India.

"As 2026 dawns, the challenge will not be just growth, but sustaining it through both reforms and strategic bets. We remain optimistic about India's growth and expect more reforms on the supply side to boost the economy," said Mazumdar. The New Year will also witness changes to how the economy is measured with an overhaul of GDP, index of industrial production and consumer price index data and changes to the base year.

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