As FY25 comes to an end, it is always interesting to conjecture on a practical basis what FY26 would look like. The Indian economy has done rather well in FY25, though the turbulence following Donald Trump taking over as president and talking tough on tariffs has affected financial markets across the world. There is apprehension about what could happen, and until there is clarity, markets will be jittery. Given this background, the following looks likely to be the state of economic affairs in the country.

The overall growth would be stable and move slightly higher in FY26. The main reason is that India is basically a domestic oriented economy where demand is driven by home factors. Therefore, while any hit in foreign trade due to tariffs will affect exports, the impact on the GDP growth would be limited and not be more than 0.2%. Hence, a growth of around 6.6-6.8% would be a conservative estimate for this year. That said, there would be certain sectors at the micro level which will bear the brunt of tariffs as exports get affected. This would be mainly readymade garments, pharma, electronics, engineering and precious stones. These segments would have to be monitored closely for possible impact on exports.

Consumption should be better this year. This would be on account of two factors. First, the government has announced in its budget that there would be a revenue loss of Rs 1 lakh crore due to the income tax benefits being given, which intuitively means more money in the pocket. While a part would be saved,........

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