India expected to report over 7% GDP growth

Forecasts for India's GDP have been optimistic, with the International Monetary Fund and the World Bank both projecting over 7 percent growth for the current fiscal year ending March.

Some experts, however, say challenges still abound in sustaining the GDP growth despite the demographic dividend.

On Jan 19, the IMF announced a revision in its previous projection of 6.6 percent, bumping its estimate of India's GDP growth for the April 2025-March 2026 period to 7.3 percent.

Earlier, on Jan 13, the World Bank raised its FY26 growth forecast for India to 7.2 percent, from 6.3 percent. The factors cited for the robust growth include strong domestic consumption, tax reforms, and good household incomes in rural areas.

The updated forecasts from the two multilateral institutions came after the Indian government also flagged strong GDP expansion for the fiscal year ending March, projecting a growth rate of 7.4 percent.

Swaran Singh, a professor of international relations at JNU, said India's high growth rate is driven by a combination of structural, demographic, policy, and external factors.

"India has a young and expanding workforce, with a median age of around 28 years — providing a sustained supply of labor and constantly rising domestic consumption levels," he said. "This demographic dividend supports long-term growth if matched with skills and jobs."

Also, an expanding middle class spearheading domestic demand is a major locomotive of higher growth, he said.

The professor added that structural reforms over the past decade have improved economic efficiency, and that services-led growth remains a comparative advantage.

Despite the slew of forecasts for more than 7 percent economic expansion, sustaining that growth would be difficult, other experts mentioned.

Karori Singh, the former director of the South Asia Studies Centre, pointed out that India needs to address its deficiencies in the manufacturing sector if it is to sustain long-term economic strength.

Another important challenge is that India cannot avail full opportunities of international trade and investment without expanding the nation's manufacturing sector and integrating it with the agricultural sector.

In this regard, China offers meaningful lessons for India, he said, noting the solid strengths of the industrial and manufacturing sector in Asia's largest economy.

Meanwhile, regardless of whatever the GDP figures may show, India is also facing the problem of wealth and incomes becoming concentrated in the hands of a few, rather than being distributed more evenly across the wider population, Karori Singh added.