Indicators such as GST collections, automobile sales, and growth in sales of FMCG suggest strong underlying momentum in the economy

Agencies New Delhi

Deloitte on Thursday projected economic growth at 6.5-6.7% for the current fiscal, as tax incentives provided in the Budget are expected to push domestic demand amid an uncertain global trade environment. Deloitte estimated India's GDP growth at 6.3-6.5% for FY25 and said that the economic outlook for FY26 hinges on a delicate balance between evolving trade relations and government efforts to boost domestic consumer demand.

“Growth this fiscal will be contingent on two opposing forces,” said Deloitte's India Economy Outlook. The first factor would be the positive impact of tax incentives aimed at growing consumer spending (as announced in the Union Budget 2025). The second and opposing force would be the potential negative impact of uncertainty in global trade networks on the Indian economy.

“The interplay of tax stimulus and trade uncertainties could keep growth between 6.5% and 6.7% for the current fiscal year,” it added. The government in the FY26 Budget has announced a tax incentive of Rs 1 lakh crore, which would benefit the middle class. Despite this, higher economic activity is expected to offset the decline in revenues, helping the government adhere to its fiscal deficit target.

“The tax exemptions announced during the budget will increase disposable income in the hands of the young population with higher income elasticity,” Deloitte India Economist Rumki Majumdar said. With regard to trade uncertainties, Deloitte said depending on how effectively India navigates the upcoming bilateral agreement, total reciprocal tariffs could range from a high of 26% to a more moderate 10%.

“Depending on India's ability to negotiate with the US and come up with a bilateral trade agreement quickly, trade tariffs may potentially shave 0.1-0.3% off India's growth,” Majumdar said. A bilateral trade agreement between India and the US by the fall, will help India find new opportunities and tap into the US market amidst global trade uncertainties, Deloitte said.