India’s economy is set to grow at 7% or higher this fiscal year, backed by strong fundamentals and resilient domestic demand, Finance Minister Nirmala Sitharaman said on Saturday.
Speaking at the Hindustan Times Leadership Summit in Delhi, she noted that low inflation, recent GST rate cuts, and steady consumer spending would continue to support growth despite global challenges.
Outperforming Expectations
India’s GDP expanded 8.2% in the July-September quarter, outperforming expectations and marking a six-quarter high. Robust festival-driven consumption, increased factory output, and strong services-sector performance helped offset weaker agricultural growth.
“We saw the growth numbers for the second quarter. I think that will sustain, and overall, this year’s growth numbers will be 7 or beyond it as well,” she said.
Gross domestic product grew 6.5% last fiscal year.
Supporting this outlook, the Reserve Bank of India recently cut the repo rate by 25 basis points and raised its GDP growth forecast to 7.3%, while lowering inflation expectations to 2%.
External Headwinds vs. Domestic Reforms
However, the economy continues to face external pressures, including higher US tariffs, widening trade deficits, and a weakening rupee, which has depreciated about 5% in 2025, recently breaching 90 per dollar for the first time.
Sitharaman maintained that the rupee would “find its natural level”, noting exporters stand to gain from its softer value.
Amid these global headwinds, the government is intensifying domestic reforms. Sitharaman announced that customs simplification will be the next major reform ahead of Budget 2026, following tax rationalisation in income tax and GST.
The overhaul will focus on transparency, easier compliance, and rationalised duty rates. She said customs duties have already been reduced over the past two years, but some remain above optimal levels and will be further lowered.
“We need a complete overhaul of customs… we need to have customs simplified for people to feel that it is not cumbersome to comply… need to make it more transparent,” Sitharaman said.
With first-half growth at 8%, Sitharaman expressed confidence that India’s economic trajectory remains firmly on track, supported by investor confidence, rising retail market participation, and robust credit demand.