Page 21 - Policy Economic Report- June'26

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

retained its position as the fastest-growing major economy in the world. Sound macroeconomic
fundamentals, including moderate consumer inflation, a stable financial system, comfortable foreign
exchange reserves, and prudent fiscal management, continued to provide resilience against external
shocks.

According to the Provisional Estimates released by the National Statistical Office (NSO), India's real Gross
Domestic Product (GDP) expanded by 7.7 % in FY 2025–26, improving from 7.1 % in the previous financial
year. Real Gross Value Added (GVA) also recorded robust growth of 7.9 %, reflecting broad-based
expansion across agriculture, industry, and services. Nominal GDP grew by 8.9 % to ?346.36 lakh crore,
while nominal GVA increased by 9.1 % to ?314.87 lakh crore. During the fourth quarter (January–March
2025–26), real GDP and GVA grew by 7.8 % and 7.9 %, respectively, indicating that economic activity
remained resilient despite increasing external headwinds.

On the demand side, strong private consumption, supported by rising incomes and stable inflation,
continued to underpin economic activity. Investment momentum remained healthy, with Gross Fixed
Capital Formation (GFCF) maintaining growth, supported by sustained government capital expenditure,
infrastructure development, and expanding manufacturing capacity. On the supply side, construction,
manufacturing, financial services, public administration, defence, and trade-related activities remained
the principal drivers of economic growth, while agriculture benefited from favourable production
conditions.

India GDP position

The World Bank has projected India's GDP growth at 6.6 % for FY 2026–27, maintaining India as the
fastest-growing major economy globally. According to the World Bank, growth will continue to be driven
primarily by domestic demand, supported by stable inflation, public infrastructure investment, improving
financial conditions, and sustained expansion in manufacturing and services. Nevertheless, higher global
energy prices, supply chain disruptions, and prolonged geopolitical tensions are expected to moderate
growth compared with FY 2025–26.

The Reserve Bank of India has also adopted a cautiously optimistic outlook. While acknowledging the
resilience of domestic economic activity, the RBI has highlighted that rising crude oil prices, exchange rate
volatility, and evolving geopolitical developments continue to pose risks to inflation and growth.
Consequently, policy emphasis remains focused on preserving macroeconomic stability while supporting
sustainable economic expansion through adequate liquidity, financial stability, and calibrated monetary
policy.

Going forward, India's growth trajectory will depend on sustained public and private investment,
continued implementation of infrastructure and manufacturing initiatives, stable inflation, and a gradual
recovery in global trade. The ongoing expansion of digital infrastructure, semiconductor manufacturing,
renewable energy, logistics, and advanced technologies is expected to further strengthen India's long-
term growth potential and improve productivity across sectors.

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