Key Highlights

• IMF expects India’s real GDP to grow 6.6 percent in FY2025 26

• Inflation seen as “well contained,” supporting stable demand

• Growth led by strong consumption, credit flow and healthier balance sheets

• India remains a standout performer among major global economies

• Investment activity improving with early signs of a capex upcycle

IMF Says India’s Economy Will Stay Robust as Inflation Remains Well Contained

India’s economic momentum remains strong, according to the IMF’s latest Article IV consultation. The global body notes that even with global headwinds slow world growth, commodity swings and geopolitical tensions - India continues to show steady expansion backed by a solid macroeconomic foundation.

The IMF highlights that inflation is now under better control, helping protect household purchasing power. This allows domestic demand across consumption, housing and services to remain firm, giving India a reliable growth engine even when external conditions weaken.

In simple terms, India continues to shine as one of the few large economies posting strong and stable growth.

Why the IMF Is Bullish on India

1. Strong Domestic Demand and Consumption

Private consumption remains the backbone of India’s economy. Stable prices, rising incomes and strong demand for housing and services are supporting overall economic activity.

2. Inflation Under Control

Headline inflation has eased, helped by steady food prices and better supply conditions. Lower inflation strengthens purchasing power and keeps both households and businesses confident.

3. Healthy Corporate and Banking Balance Sheets

Corporate and banking sector balance sheets look stronger than they have in years. Non performing assets are at multi year lows, credit growth is steady, and banks have enough capital. This stability supports investment and lending.

4. Improving Investment and Capex Cycle

Government infrastructure spending and improving private sector sentiment are lifting the investment climate. Sectors like infrastructure, cement, metals and capital goods are expected to benefit from this capex momentum.

Sectoral Implications

Services Sector

With steady consumption and rising demand across travel, hospitality, IT and financial services, the services sector should continue to lead growth.

Manufacturing and Capex Driven Sectors

Better balance sheets, stronger credit flow and higher investment activity may support growth in manufacturing, capital goods and infrastructure related industries.

Financial and Banking Sector

Healthy banks combined with controlled inflation encourage more lending to corporates, small businesses and retail consumers.

Consumption Oriented Sectors

Stable prices and steady incomes are positive for consumer goods, housing materials, vehicles and services demand.

Global Overhang and Risks to Watch

The IMF also highlights risks that could weigh on growth:

• Volatile commodity prices, especially crude oil, could raise inflation and hurt margins

• Weak global demand may affect export heavy sectors such as textiles, chemicals and engineering

• Weather shocks or supply issues, especially in agriculture, may trigger food inflation and slow rural recovery

While India’s domestic fundamentals are strong, external volatility remains a risk that requires careful monitoring.

Final Word

The IMF’s assessment strengthens confidence in India’s economic outlook. With inflation under control, domestic demand resilient and corporate and banking health improving, India is well placed to maintain its growth pace in FY2025 26.

Sectors linked to consumption, credit, infrastructure and investment stand to gain from this stability. But policymakers and investors need to stay alert to global risks that could impact inflation and external demand.

Sources

• IMF Executive Board — 2025 Article IV Consultation Report on India

• Economic Times coverage: “IMF says India’s economy will stay robust despite external headwinds as inflation remains well-contained”

• NDTV and IBEF summaries of IMF growth projections for FY2025‑26 and FY2026‑27