Current Affairs - Economy

Crisil has forecasted India’s GDP growth at 6.5% for the fiscal year 2026, attributing this projection to a combination of strengthening domestic consumption, easing inflation, expected interest rate cuts by the RBI, and a favourable monsoon. These factors are expected to stimulate demand, particularly in rural areas, and bolster growth across key sectors such as agriculture, industry, and infrastructure. In addition, stable oil prices are projected to support macroeconomic stability by easing the current account deficit and improving corporate margins. Together, these conditions form the basis of Crisil’s cautiously optimistic outlook for India’s economic trajectory in FY26.

In FY 2024-25, India achieved a 7.9% reduction in coal imports, bringing the total volume down to 243.62 million tonnes from 264.53 million tonnes in the previous year. This significant decline contributed to foreign exchange savings of approximately $7.93 billion, underlining the country’s efforts toward energy self-reliance. The drop is a result of strategic government measures, including the expansion of domestic coal production through commercial mining and focused programs like Mission Coking Coal. This shift not only reduced dependency on foreign coal but also supported the broader goal of a self-reliant and energy-secure India under the "Viksit Bharat" initiative.

In FY 2024–25, India achieved a record high in Foreign Direct Investment (FDI), securing a total of $81.04 billion. This represents a 14% increase from the previous fiscal year, highlighting India's growing appeal as a global investment destination. The surge was largely fueled by increased investments in the services and manufacturing sectors, with services alone seeing a 40.77% rise in FDI equity inflow. Key reforms in FDI policy, sector liberalization, and consistent economic growth have contributed to this milestone. The inflows were also geographically diverse, with states like Maharashtra, Karnataka, and Delhi leading the chart, and countries like Singapore, Mauritius, and the U.S. being top contributors.

The Indian government has retained the interest rate on Employees' Provident Fund (EPF) deposits at 8.25% for FY2024-25, as approved by the Ministry of Finance following the Central Board of Trustees’ recommendation. This rate matches the previous year’s rate, ensuring steady returns for over 7 crore EPFO subscribers. EPF is a mandatory retirement savings scheme where both employee and employer contribute 12% of the basic salary. Maintaining this attractive interest rate supports financial security for salaried employees and sustains confidence in EPF as a reliable long-term investment.

Fitch Ratings has raised India's medium-term GDP growth outlook to 6.4% till FY2026, up from its earlier estimate of 6.2%. This upward revision is primarily attributed to an increase in labour force participation, reflecting structural improvements in India’s employment landscape. The update sets India apart from many other emerging markets, whose growth forecasts have been revised downward. While some concerns remain regarding slower labour productivity growth, Fitch believes India’s Total Factor Productivity will stabilize at 1.5%. The revision underscores India's post-pandemic resilience and positions it as a strong performer in the global economic landscape.