Doha, Qatar: Qatar National Bank (QNB) expects the Indian economy to maintain robust growth despite global challenges and geopolitical volatility, projecting that strong domestic fundamentals will keep expansion above 6%, reinforcing its position among the world's fastest-growing major economies.
In its weekly report, QNB said India is undergoing a rapid transformation into a key driver of global economic growth. Between 2000 and 2025 -- including periods marked by the global financial crisis and the COVID-19 pandemic -- the economy recorded an average growth rate of 6.3%.
This sustained performance has elevated India to the world's fifth-largest economy, accounting for around 8.5% of global output. Real GDP growth exceeded 7% in the 2025-2026 fiscal year, marking the fourth consecutive year in which India has ranked as the fastest-growing major economy.
Given the size of its economy, India's growth contributes approximately 0.6 percentage points to global output expansion, with its share projected at about 3% of total global growth in 2026.
According to the report, India enters the 2026-2027 fiscal year with strong growth prospects, supported by high-frequency indicators that point to continued economic momentum despite external pressures, particularly geopolitical tensions and energy price volatility, which could weigh on the macroeconomic outlook.
QNB identified three key drivers underpinning the sustainability of growth. The first is resilient private consumption, which accounts for more than 60% of GDP. Household spending continues to expand steadily, supported by improving labor market conditions, rising real incomes, and easing inflation -- factors that enhance the economy's resilience to global shocks.
High-frequency indicators, including automobile sales and retail activity, confirm the continued strength of consumption despite some moderation. Private consumption is expected to remain the primary engine of growth during the 2026-2027 fiscal year.
The second driver is the strengthening role of investment, supported by increased government spending on infrastructure and a gradual recovery in private-sector capital expenditure. Investment is expected to remain above 30% of GDP over the medium term.
In the public sector, capital expenditure remains a priority, with infrastructure spending estimated at between 3% and 3.5% of GDP and projected to grow by more than 10% in the 2026-2027 fiscal year, supporting economic activity and enhancing productivity.
Private investment is also gaining momentum, with fixed investment expected to grow between 6% and 7% in 2026, driven by stronger corporate balance sheets and expanding credit.
The third factor is a favorable inflation environment combined with supportive monetary policy. Headline inflation averaged below 3% during 2025-2026, remaining well below the Reserve Bank of India’s 4% target midpoint and within its tolerance range of 2% to 6%.
This environment enabled the central bank to implement cumulative interest rate cuts of 125 basis points in 2025, bringing the policy rate down to 5.25%, its lowest level since 2022.
Although the pace of monetary easing has temporarily paused to assess emerging risks, financial conditions remain accommodative, with lower lending rates and continued credit growth. Consequently, the combined effect of subdued inflation and supportive monetary conditions continues to bolster domestic demand.
The report concluded that India's economy is well-positioned to sustain strong performance in the 2026-2027 fiscal year, supported by resilient domestic demand, sustained investment momentum, and favorable policy conditions, despite external risks -- particularly those related to energy prices and geopolitical developments.
