India to remain fastest growing major economy with 6.5% growth in FY26: IMF

New York: Multilateral financing agency International Monetary Fund (IMF) has said that India will retain its position as the fastest-growing major economy by clocking a GDP growth of 6.5 per cent in 2025-26, on the back of robust private investment and macroeconomic stability.

India’s strong economic performance, the IMF said, provides an opportunity for the country to advance critical and challenging structural reforms to realise the ambition of becoming an advanced economy by 2047.

"Real GDP is expected to grow at 6.5 per cent in 2024-25 and 2025-26, supported by robust growth in private consumption on the back of sustained macroeconomic and financial stability.

According to the second advance estimate released by the Indian government, the country's economy is expected to clock a growth rate of 6.5 per cent during 2024-25. “Headline inflation is expected to converge to target as food price shocks wane," the IMF said after Article IV consultations with India.

The IMF statement also underlined the need for deeper implementation of structural reforms to boost private investment and employment, and push growth.

"...comprehensive structural reforms are crucial to create high-quality jobs, invigorate investment, and unleash higher potential growth. Efforts should focus on implementing labour market reforms, strengthening human capital, and supporting greater participation of women in the labour force," it added.

Boosting private investment and FDI, the IMF statement said, was vital and would require stable policy frameworks, greater ease of doing business, governance reforms, and increased trade integration. These would include both tariff and non-tariff reduction measures.

It further said that despite recent moderation, India’s economic growth has remained robust, with GDP growth of 6 per cent y-on-y in the first half of 2024-25. Inflation has broadly declined within the tolerance band of the Reserve Bank (of 2 to 6 per cent), though food price fluctuations have created some volatility, the statement said.

The financial sector, it added, has remained resilient, with non-performing loans at multi-year lows. Fiscal consolidation has continued, and the current account deficit has remained well contained, supported by strong growth in service exports.