India’s FY26 economy off to steady start, says Finance Ministry review

New Delhi

India’s economy showed strong performance in the first quarter of the 2025–26 financial year, with steady supply, rising demand, and controlled inflation, according to the Finance Ministry’s June 2025 Monthly Economic Review. The report described the country’s growth as “steady as she goes,” showing confidence in how the economy is shaping up.

Experts like S&P, ICRA, and the Reserve Bank of India expect India’s GDP growth for FY26 to stay between 6.2% and 6.5%. The government credited this to strong domestic demand, careful budgeting, and support from the central bank.

India’s stock markets also remained stable, helped by local investors. Banks are doing better, with improved earnings and fewer bad loans. The Gross NPA (non-performing asset) rate dropped to 2.3%, and Net NPA stood at just 0.5% — the lowest in decades.

Agriculture received a boost from an early and above-normal southwest monsoon. This improved the chances of a good kharif harvest. Fertiliser supplies and water levels in reservoirs are also good. A NABARD survey said 74.7% of rural families expect their income to grow this year — the highest number since the survey began.

However, the report also warned about risks. A 0.5% contraction in the U.S. economy could reduce demand for Indian exports. Tariff uncertainties and slow growth in credit and private investments could also limit momentum.

The report added that India must keep up with global changes in key industries like semiconductors and rare earths to stay competitive.

The overall message: India’s economy remains strong, but challenges lie ahead.