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9 January 2026|The Hindu
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EconomyInternational RelationsNEWS

UN Projects India's FY26 Growth at 7.2%, Cites Tariffs

UN DESA forecasts India's FY26 growth at 7.2%, offsetting tariff impacts.

Background Context

The history of economic forecasting in India is intertwined with the country's planning process, which began in 1951 with the First Five-Year Plan. Early economic projections were largely based on the Harrod-Domar model, emphasizing capital accumulation as the primary driver of growth. Over time, forecasting methodologies evolved to incorporate more sophisticated econometric models, reflecting the increasing complexity of the Indian economy. The establishment of institutions like the National Council of Applied Economic Research (NCAER) and the Reserve Bank of India (RBI) played a crucial role in developing and refining these forecasting techniques. The liberalization of the Indian economy in 1991 further necessitated more accurate and timely economic forecasts to guide policy decisions and attract foreign investment. The shift from a centrally planned to a market-oriented economy demanded a greater understanding of global economic trends and their impact on India.

The United Nations Department of Economic and Social Affairs (UN DESA) projects India's economy to grow at 7.2% in financial year 2025-26. This forecast comes a day after the Indian government estimated a 7.4% growth rate. The UN report suggests that consumption and public investment can largely offset the impact of tariffs imposed by the U.S., although it warns that continuing tariffs could weigh on the economy, as 18% of Indian exports are U.S.-bound. The report also predicts India's growth to be 7.4% in calendar year 2025, and 6.6% and 6.8% in 2026-27 and 2027-28, respectively, supported by resilient consumption and strong public investment.

Key Facts

1

India's FY26 growth forecast: 7.2% (UN DESA)

2

India's FY26 growth estimate: 7.4% (Indian government)

3

Indian exports to U.S.: 18%

Latest Developments

In recent years, India's economic forecasting landscape has witnessed increased reliance on high-frequency data and machine learning techniques to improve accuracy and timeliness. The COVID-19 pandemic highlighted the limitations of traditional forecasting models and accelerated the adoption of alternative approaches. The Economic Survey of India, published annually by the Ministry of Finance, has become a key source of economic projections and policy recommendations. The increasing integration of the Indian economy with the global economy has made it more susceptible to external shocks, necessitating more frequent and comprehensive economic assessments. The government's focus on infrastructure development and manufacturing through initiatives like 'Make in India' is expected to drive economic growth in the coming years, but the impact of global trade tensions and geopolitical uncertainties remains a key concern.

3 Key Concepts to Understand

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