Economy to develop at 6.5% in FY26 regardless of international tensions, commerce uncertainties, says EAC-PM chairman Mahendra Dev

In an interview with PTI, Mr. Dev additional stated that home progress will probably be pushed by low inflation, ensuing from good monsoon and benign rate of interest regime, triggered by three back-to-back fee cuts by the Reserve Bank of India.

“There are vital international headwinds like the dual shocks of geo-political tensions and commerce coverage uncertainties.

“However, the Indian economy is resilient and continues to be the fastest growing country among large economies,” the eminent economist stated.

According to Mr. Dev, high-frequency indicators for the primary two months of 2025-26 point out resilient efficiency of the home economic system.

“A 6.5% of GDP growth for FY26 is feasible despite global uncertainties. India’s medium-term growth prospects seem to be robust with sound fiscal management,” he stated.

Dev additionally emphasised that rising authorities capital expenditure can have constructive affect on progress with a wholesome enlargement in non-public consumption. The International Monetary Fund (IMF) and the World Bank have slashed India’s progress projections for 2025-26 to six.2% and 6.3%, respectively, citing unsure international surroundings and excessive commerce tensions.

The Indian economic system is estimated to have grown at 6.5% within the earlier fiscal 12 months.

As per the Reserve Bank of India’s projections, the nation’s economic system will broaden on the similar fee within the present fiscal 12 months as nicely.

Mr. Dev stated there are numerous home tailwinds corresponding to low inflation, fee cuts, and money reserve ratio (CRR) reduce by the RBI, anticipated good monsoon, measures within the final Budget like rising capital expenditure, tax discount, and so on.

“These tailwinds may raise both rural and urban demand by raising both investment, consumption and some push to exports,” he stated, including that on the provision aspect, agriculture and companies are doing nicely and the expansion of producing will enhance through the years.

Responding to a query on inflation, Mr. Dev stated with a very good monsoon, meals inflation must be below management this 12 months.

“Projections present continued moderation within the costs of many commodities, together with crude oil.

“Of course, we have to be watchful about the geopolitical uncertainties and tariff-related tensions, which can raise commodity prices,” he stated.

CPI headline inflation was 2.10 per cent in June 2025 and it’s the lowest year-on-year inflation after January 2019. Crude oil costs are at the moment below management.

Food inflation in June 2025 was -1.06%. Assuming a traditional monsoon, RBI projected inflation at 3.7% for FY26.

Responding to a query on surge in web outward international direct funding (FDI), Mr. Dev identified that the World Investment report 2025 reveals that international FDI inflows grew a marginal 3.7% in gross FDI to $1,509 billion in 2024.

“This is much lower than the global FDI inflows that had peaked nine years ago at $ 2,219 billion in 2015,” he stated.

In different phrases, Dev stated international FDI itself is rising slowly.

Noting that India’s FDI inflows have elevated 14% in FY25 — though there was a moderation in web FDI — he stated it’s identified that there was web outward FDI and an increase in repatriation.

“Exits and repatriation are part of the process and indicates a sign of a mature market. Unless you enable exit, the country can’t attract investment,” the EAC-PM chairman stated.

He identified that it might be famous that non-resident deposits and exterior business borrowings (ECBs) recorded greater web inflows in FY 25 in comparison with FY24.

“Higher gross FDI also indicates that India continues to remain an attractive investment destination,” Mr. Dev stated.

Referring to the federal government’s push for public capital expenditure, Dev stated rising authorities capex may even have affect on non-public sector funding as research have proven that creation of nationwide highways and rural roads have elevated companies in rural and concrete areas.

“In other words, government capex will have multiplier effects. There are some green shoots on private capex,” he asserted.

Pointing out that many state governments are additionally attracting home and international non-public funding, he stated the company sector and banks are incomes extra earnings now and their stability sheets are in fine condition.

“So, there is no problem of capital availability. Industry is positive about India’s growth story,” Mr. Dev stated.

While the company sector might be holding funding in capability enlargement as a consequence of international uncertainties and overcapacity in some international locations like China, enhance in rural and concrete demand will facilitate extra non-public funding, he stated.

“Many firms turned debt free and doubled their cash on the books. India Inc has to make new investments instead of keeping the cash,” the EAC-PM stated.

Citing Economic Survey 2024-25, which had argued for deregulation and easing “compliance burden”, he stated there’s a want for extra progress on “ease of doing business” on the state degree.

“Hopefully, private capex will be more once the domestic demand increases further and global uncertainties are reduced,” Dev stated, including that when the tariff issues are over, there will probably be extra alternative for Indian business to speculate.