Goldilocks phase, reforms glide path to spur economy in 2026
Real GDP growth accelerated through successive quarters, reaching 8.2 per cent in Q2 of 2025-26
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New Delhi: India, the world’s fourth largest economy, is set to maintain the ‘goldilocks’ phase with tailwinds of good growth, low inflation and robust banking performance as well as reform initiatives poised to sustain the economic pace witnessed during 2025.
Propelling the themes of ease of living and ease of doing business, the BJP-led Union government’s next Budget is expected to unveil new measures to spur capital expenditure and private funding, making the country a more attractive investment destination amid tariff and geopolitical uncertainties.
Real GDP growth accelerated through successive quarters, reaching 8.2 per cent in Q2 of 2025-26, while retail inflation slipped below the Reserve Bank’s lower tolerance band of 2 per cent towards the close of the year.
A government note said that, with a GDP of $4.18 trillion, India has surpassed Japan to become the world’s fourth-largest economy and is poised to displace Germany from the third-largest rank in the next 2.5 to 3 years, with a projected GDP of $7.3 trillion by 2030.
“The present macroeconomic situation presents a rare ‘goldilocks period’ of high growth and low inflation,” it added.
The government is also working to update the base year for national accounts to 2022-23 from 2011-12, effectively addressing concerns raised by the International Monetary Fund (IMF) about the methodology for computing gross domestic product (GDP) data.
On the domestic currency front, foreign portfolio outflows from equity markets exerted downward pressure on the rupee; nonetheless, rupee volatility moderated in November from a month ago.
