Strong Domestic Consumption Sustains Economic Growth Amid Regional Conflict
Strong consumption keeps growth steady amid Iran war cost concerns
The Economic Times
Image: The Economic Times
India's economy grew by 7.7% in fiscal 2026, driven by robust domestic consumption, despite challenges from the West Asia war affecting oil and fertilizer prices. The government aims to boost foreign direct investment and maintain capital expenditure while addressing rising costs for farmers.
- 01India's economy recorded a growth of 7.7% in fiscal 2026, with a 7.8% increase in the March quarter.
- 02Gross foreign direct investment (FDI) inflows reached a record $94.5 billion in FY26.
- 03The government is targeting ₹80,000 crore in disinvestment and asset monetization for FY27.
- 04A current account surplus of 0.7% of GDP was achieved in the March quarter, supported by strong remittances.
- 05The Centre plans to maintain its capital expenditure at ₹12.22 lakh crore for FY27.
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India's economic growth remains steady, with a reported increase of 7.7% for fiscal 2026, bolstered by strong domestic consumption. Despite challenges posed by the ongoing West Asia war, which has led to higher crude oil and fertilizer prices, the government is exploring measures to enhance foreign direct investment (FDI). Gross FDI inflows reached a record $94.5 billion in FY26, although net inflows were lower due to repatriation. The government aims to achieve a disinvestment and asset monetization target of ₹80,000 crore for FY27, with recent share sales from companies like Coal India and NHPC. Additionally, India recorded a current account surplus of 0.7% of GDP in the March quarter, driven by strong remittances and services exports. The Centre plans to sustain its capital expenditure at ₹12.22 lakh crore for FY27, while also addressing rising costs for farmers due to increased fertilizer prices. The Goods and Services Tax Council is expected to discuss further reforms in an upcoming meeting.
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The government's financial decisions, including increased subsidies and maintaining capital expenditure, aim to support vulnerable populations affected by rising costs.
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