New Delhi, Apr 21 (KNN) India’s economy is projected to grow at 6.4 percent in 2026 and 6.6 percent in 2027, maintaining its position as a key growth driver in the Asia-Pacific region, according to a report by the United Nations Economic and Social Commission for Asia and the Pacific (UN-ESCAP).
In its Economic and Social Survey of Asia and the Pacific 2026, ESCAP noted that the region grew by 5.4 percent in 2025, up from 5.2 percent in 2024, supported significantly by India’s strong performance.
India recorded 7.4 percent growth in 2025, driven by robust consumption, particularly in rural areas, GST rate cuts, and export frontloading ahead of tariff hikes by the United States, The Times Of India reported.
Growth moderates amid external pressures
The report highlighted a slowdown in economic activity in the latter half of 2025, largely due to a sharp 25 percent decline in exports to the US following the imposition of 50 percent tariffs in August last year. However, the services sector continued to act as a key growth engine.
Inflation is expected to remain stable, with projections of 4.4 percent in 2026 and 4.3 percent in 2027, indicating a relatively controlled price environment alongside steady economic expansion.
FDI, remittances remain key drivers
ESCAP noted that foreign direct investment inflows into developing Asia-Pacific economies declined by 2 percent in 2025 amid global uncertainties.
Despite this, India remained among the leading destinations for greenfield investments, attracting around $50 billion in the first three quarters of the year.
The report also underscored the importance of remittances in sustaining domestic consumption. India, the world’s largest recipient, received about USD 137 billion in 2024. However, a 1 percent tax on remittances imposed by the US from January 2026 could pose challenges.
Clean energy transition to support growth
The report emphasised the role of clean energy transition in driving future growth and job creation. Globally, an estimated 16.6 million green jobs have been created, with India accounting for around 1.3 million.
Policy initiatives such as production-linked incentives are expected to support domestic manufacturing in sectors including solar energy, batteries, and green hydrogen, strengthening India’s industrial base.
Outlook remains strong despite risks
The UN outlook aligns with projections by the International Monetary Fund, which also expects India to remain the fastest-growing major economy globally.
While global risks such as geopolitical tensions and trade disruptions persist, the report noted that India’s strong domestic demand, policy support, and integration into global supply chains are likely to sustain its growth momentum in the coming years.
(KNN Bureau)
2012-01-26
