Former Chief Economic Advisor Arvind Subramanian stressed the need for ‘caution’ on Friday after India released its GDP projections for FY26.
India released its first advance estimate of GDP numbers for FY26 earlier this week — projecting a growth rate of 7.4% during the current financial year. Data provided by the National Statistics Office also estimated that real GDP would reach Rs 201.90 lakh crore while nominal GDP grew by an estimated 8% during this period. Economists remain somewhat wary amid heightened global uncertainty, tariff tensions and the somewhat cautious investment sentiment prevalent in the markets.
‘Not obvious that economy is recovering’
“We should be cautious about both the level and direction in which India’s economy is headed…It is not obvious that the economy is recovering. All of the nominal indicators are decelerating. Nominal GDP is decelerating and many of the high-frequency indicators are also slowing down. I think we should be cautious about both the level and the direction in which the economy is headed,” he told Bloomberg Television.
Subramanian also made note of pressures faced by the Indian Rupee in recent months — adding that it “would be very odd for capital to be fleeing a country where growth is so much greater than anywhere in the world”. He also suggested that the estimate might also be facing the “age-old problem” of measurement accuracy — citing an unusually low deflator.
Impact of US and China
The former CEA added that one was likely to feel anxious while looking ahead — given that India had suffered two major external shocks in 2025. US President Donald Trump imposed a 50% tariff against most imports last year and recently hinted at plans for a 500% tariff against those who continued to buy Russian oil. Subramanian also addressed the issue of “Chinese mercantilism” and how it has affected Indian markets.
“The first is the tariff shock. The headline number is worse than the actual number because of the exemptions. But on the other hand, it’s now looking less likely that there will be a trade deal…and it is maybe looking likely that the tariff numbers may heading upwards too. I think the tariff shock has not gone away by any means. The second stock is of course Chinese mercantilism. That China has started exporting very rapidly and diverting its exports to developing countries, including India. And that will put pressure on India. So, I think one has to be looking cautious,” he explained.