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

The International Monetary Fund (IMF) has said that India will retain its position as the fastest-growing major economy in the world by witnessing a 6.5% GDP growth in 2025-25 driven by robust private investment and macroeconomic stability, a PTI report said on Saturday.

The multilateral financing agency IMF said that India’s strong economic performance offers an opportunity for the country to improve its crucial and challenging structural reforms. This will help the country achieve its goal of becoming an advanced economy by 2047.

"Real GDP is expected to grow at 6.5% 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% 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 PTI report stated.

The statement by the IMF highlighted the need for better and advanced implementation of structural reforms to boost private investment and employment, and fuel 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," the statement added.

The IMF further said that to boost private investment, stable policy frameworks are essential along with greater ease of doing business, governance reforms, and increased trade integration, including both tariff and non-tariff reduction measures.

Despite moderation seen in recent times, India’s economic growth has remained strong with a GDP growth of 6% year-on-year (YoY) in the first half of the current fiscal year (2024-25), it said. While food price fluctuations have created some volatility, inflation has broadly eased with the tolerance band of the Reserve Bank (of 2 to 6%), the statement said.

The IMF added that the financial sector of the country has remained resilient with non-performing loans at their multi-year low levels. Fiscal consolidation has continued, current account deficit has remained under control, driven by robust growth in service exports.