Summary:

According to EY, India's GDP is expected to grow by 6.5% in FY26, supported by lower crude oil prices. The EY Economy Watch report identifies four key factors influencing growth: reduced exports, a global slowdown, falling crude oil prices, and excess production capacity. Despite global trade tensions, effective fiscal and monetary policies may sustain GDP growth at 6.5% while keeping CPI inflation around 4%, with minimal impact from weaker exports.

EY recommends that India’s short-term strategy include shifting some crude oil imports to the US to improve the trade balance and reduce reciprocal tariff rates. A bilateral trade agreement expected by September-October 2025 could further stabilize trade with the US. For the medium to long term, accelerating land and labor reforms, investing in education, skilling, emerging technologies like AI and GenAI, and expanding PLI coverage are crucial.

Source: IBEF

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