India’s Economy Set To Grow 6.3-6.8% In FY26, Focus On Productivity And Investment: CEA Nageswaran

India’s economy is expected to grow between 6.3% and 6.8% in FY26, Chief Economic Advisor V Anantha Nageswaran said on Thursday.

He added that this growth could be sustained over a longer period despite global and political uncertainties.

Nageswaran highlighted several positives supporting this outlook. These include opportunities in sectors affected by US tariffs, a favourable monetary policy, tax relief for the middle class, and a well-distributed monsoon.

The International Monetary Fund (IMF) shares this growth forecast.

Preparing For A Stronger Rupee & Higher Productivity

Nageswaran advised Indian industry to prepare for a stronger rupee by improving competitiveness and productivity. He emphasised the role of deregulation at both policy and corporate levels.

However, he cautioned against being overly cautious about global uncertainties, noting India’s domestic economy relies heavily on private consumption, which forms 60% of GDP.

He urged the private sector to invest, hire, and create aggregate demand to sustain growth. He also called on industry to partner with the government in deregulation efforts to boost growth.

India must create at least eight million new jobs annually outside agriculture, focusing on capital-led and labour-intensive manufacturing growth.

Nageswaran pointed out that corporate profitability has grown fourfold over the past decade, but capital formation has lagged behind.

To sustain real growth of 6.5% or more, the gap between profitability and capital formation must close.

He stressed that rising profits should translate into more capital investment and better worker compensation.

Currently, profit growth trails both capital formation and compensation, which poses a long-term challenge for India’s economy.

AI & Business Reforms For Sustained Growth

At the same summit, India’s G20 Sherpa Amitabh Kant said the AI race has just begun. He urged Indian businesses to build foundational AI models using open-source and interoperable systems, as India has done in digital public infrastructure.

Kant also called for states to implement reforms, invest in research and development, and use quality control orders wisely to enhance industry competitiveness.

He recommended that states provide long-term land leases and privatise discoms to improve efficiency.

Environment Minister Bhupender Yadav outlined India’s climate policy pillars, focusing on a self-reliant circular economy, ecosystem protection, and climate resilience.

Commerce Minister Piyush Goyal announced plans to lead trade delegations to Europe, amid growing foreign direct investment interest in India.

NITI Aayog Vice Chairman Suman Bery stressed the need to improve labour productivity to raise living standards and achieve India’s ‘Viksit Bharat’ vision of becoming a high-income, developed nation.

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