India has cemented its status as the fastest-growing large economy globally with the Q2 FY26 GDP growth being 8.2 percent year-on-year the highest rate in six quarters. IMF estimates 6.4% growth in 2025-26 and 2026-27 and Crisil estimates the growth at 7% in FY26, attributing it to strong consumption, GST rationalization and declining inflation. Since being ranked the fourth largest economy after Japan at $4.2 trillion, NDTV estimates indicate that India will be the fifth largest economy at 7.3 trillion by the year 2030.
Drivers of Momentum
This growth is driven by strong domestic demand that is driven by real wage growth, urban middle-income growth and expenditure during the festive season. The recent 25 bps cut in the repo rate by RBI to 5.25% citing a period of goldilocks at high growth and 0.7% CPI inflation is in favor of the recovery of the private capex. The forex reserves reached 700 billion, which protects against the volatility in the world as the crude oil averages to 63.6/barrel.
Front loading of capex by the government, PLI programs and digital public infrastructure have increased manufacturing to 17 per cent of GDP. Exports increased 12.0 YoY, and were led by electronics (exceeded target of 50B early) and services (exceeded target of 350 B).
Gurcharan Das Flags Relentless Struggle.
Economist Gurcharan Das warns against jobless growth despite the boom. The level of youth unemployment remains at 7.5, the rural distress continues after the unpredictable monsoons, and MSMEs are faced with compliance. Das calls to consolidate labor law, skills training and productivity growth in the farmlands so that everyone can be included.
Budget 2026: Key Sectoral Demands
The February 1 Budget by Finance Minister Nirmala Sitharaman comes with the fiscal space (4.5% deficit target). Semiconductors require extension of 25,000 crore PLI to Tata-Micron fabs in a move to have 10 percent global market by 2030.
Rural agriculture aims at ₹2.5 lakh crore, comprising of 8-10 percent MSP increases on 23 crops, nano-urea subsidies and PMKSY irrigation. According to Economic Times Now, funding and climate-resilient seeds are the priorities of FPOs.
| Sector | Outlay to be expected | Areas of focus |
| Semiconductors | 25,000 Cr | Fabs, design centres, competencies |
| Rural Agri | 2.5L Cr | MSP, insurance, nano-fertilizers |
| MSMEs | 4L Cr | credit, GST concession, exports |
Road to $7.3 Trillion
100 airports, 50,000km of highways, 40% of GDP on infra, will sustain a 8%+ growth. RBI sees further reduction of 50bps as long as inflation remains below 2.5%. Das points out: “Jobless growth is empty.
Budget 2026 may overcome geographical inequality, making India the third-largest economy. Viksit Bharat will run on strategic semis and agri bets.
