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In a world of slower and more uneven global growth, India’s trajectory under Prime Minister Narendra Modi stands out
When the Modi government took office in 2014, India was frequently grouped among the ‘Fragile Five’ economies vulnerable to external financing shocks. Twelve years later, the narrative has reversed. (File image: PTI)
Under the Modi government in mid-October 2026, a series of upward revisions by major international institutions confirmed what domestic data had already been signalling. India’s economy is displaying greater resilience and stronger medium-term momentum than earlier expected. The International Monetary Fund, in its October World Economic Outlook, raised India’s FY27 (2026-27) growth forecast by 60 basis points to 7% per cent from the 6.4%. The World Bank upgraded its FY27 projection by 50 basis points to 7.1% while the Reserve Bank of India set its own forecast at 7.1%. The OECD, Asian Development Bank, S&P Global Ratings and others converged around the 7% mark. These upgrades occurred against a backdrop of elevated global oil prices linked to conflict in West Asia, slower world growth (IMF sees global growth at merely 3.1% in CY 2026) and heightened geopolitical uncertainty.
India’s real GDP grew 7.7% in FY26 and then expanded 7.8% in the April–June quarter of FY27, witnessing the strongest first-quarter print in four years. Private consumption rose 7.1%, gross fixed capital formation (investment) surged nearly 12%, manufacturing expanded solidly, and services remained robust. High-frequency indicators through the subsequent months continued to show resilience in industry and services even as agriculture faced monsoon-related risks. This data forced forecasters to recalibrate. The IMF explicitly attributed the revision to “stronger-than-expected momentum, supported by resilient domestic demand and robust services activity”. It further noted that India “stands out with upward revisions, reflecting sustained momentum and growing evidence of stronger growth potential supported by favourable demographic dynamics, a large and expanding domestic market, and continued structural reforms”.
The World Bank pointed to the same domestic demand and industrial/services momentum, while highlighting reforms including labour-code consolidation, GST, tariff rationalisation, the Insolvency and Bankruptcy Code and investments in physical and digital infrastructure. Several structural factors underpin the more optimistic outlook. First, India’s large and growing domestic market provides a buffer against external shocks. With a population exceeding 1.4 billion and a young demographic profile—more than half under 25 and the working-age share expected to remain elevated into the 2040s—consumption demand has a durable base. Favourable demographics reduce the dependency ratio and expand the labour force, creating potential for higher potential growth if employment and skills keep pace. Second, services continue to deliver consistent high growth, while manufacturing has shown renewed strength, aided by policy incentives under the Modi government. Third, the economy has developed better shock absorbers through infrastructure investment, cleaner bank balance sheets and stronger external buffers. The contrast with the global picture is sharp. While advanced economies are projected to grow around 1.8%-2.1% and emerging markets as a group may slow down to the mid-3% range in 2026, India is expected to expand at roughly twice the world average. This relative performance is not accidental; it reflects 12 years of deliberate policy choices by PM Modi, that improved the economy’s resilience and efficiency.
When the Modi government took office in 2014, India was frequently grouped among the “Fragile Five” economies vulnerable to external financing shocks. Twelve years later, the narrative has reversed. Key reforms and institutional changes have formalised large parts of the economy, cleaned up the financial system, expanded infrastructure and built digital public infrastructure that supports both efficiency and inclusion. The Goods and Services Tax (GST), introduced in 2017, replaced a patchwork of Central and State levies with a unified indirect tax regime. This created a genuine common national market, reduced cascading taxes and improved supply-chain efficiency. Registered taxpayers rose from roughly 66.5 lakh in 2017 to 1.65 crore by mid-2026. Gross GST collections increased from about Rs 7.4 lakh crore in 2017-18 to more than Rs 22 lakh crore in 2025-26, with monthly collections continuing to show healthy growth. The system has supported formalisation and provided a more stable revenue base for both the Centre and states.
The Insolvency and Bankruptcy Code (IBC) of 2016 transformed the resolution of stressed assets. Gross non-performing assets (NPAs) of scheduled commercial banks, which peaked around 11.2% in March 2018, fell to approximately 1.7% by mid-2026. By March 2026, nearly 9000 corporate insolvency resolution processes had been admitted, and creditors had realised substantial amounts through approved plans. Cleaner bank balance sheets have revived credit growth and supported both consumption and investment. Digital public infrastructure has been transformative. The combination of Aadhaar, the Pradhan Mantri Jan Dhan Yojana (more than 59.15 crore accounts opened) and the Unified Payments Interface (UPI) has expanded financial inclusion and reduced leakages in welfare delivery. UPI alone processes tens of billions of transactions monthly. Direct Benefit Transfers have transferred over Rs 50 lakh crore rupees directly to beneficiaries, with estimated savings from eliminating duplicates and fakes exceeding Rs 4 lakh crore. This digital backbone has also enabled rapid scaling of schemes during crises and improved the efficiency of government spending under PM Modi.
Infrastructure investment has been a hallmark. Central government capital expenditure rose several-fold, reaching around Rs 12 lakh crore in recent budgets. National highways expanded from roughly 91,000 km in 2014 to more than 146,000 km by 2026. Operational airports nearly doubled, metro networks expanded more than fourfold, railway electrification and capacity increased substantially and port and logistics connectivity improved under frameworks such as “PM Gati Shakti and the National Logistics Policy”. These investments raised productivity by reducing logistical costs and expanding market access. Manufacturing has received targeted support through the Production Linked Incentive (PLI) schemes covering 14 sectors. By March 2026, actual investment under PLI exceeded Rs 2.4 lakh crore, generating large production and export volumes, particularly in electronics. Mobile-phone production and exports rose dramatically, shifting India from a major importer towards being a significant production and export hub. Semiconductor and related component initiatives are now building the next layer. Other measures include corporate tax rationalisation, labour-code consolidation (reducing 29 laws into four codes), decriminalisation of minor business offences, and progressive liberalisation of FDI in multiple sectors.
Cumulative FDI inflows since 2014 have been substantial. Foreign-exchange reserves stood above $700 billion for much of 2026 (around $726 billion in early October after a peak of nearly $786 billion), providing a strong buffer, while the current-account deficit has remained contained at less than 2%, relative to the dangerously high levels of the pre-2014 period, under an absolutely incompetent and corrupt Congress. Multidimensional poverty has declined markedly under PM Modi’s aegis; independent estimates indicate that well over 250 million people have exited poverty over the past decade, supported by expanded welfare delivery, housing, sanitation, cooking gas and financial inclusion.
At A Glance
The International Monetary Fund raised India’s FY27 growth forecast by 60 basis points to 7% in its October World Economic Outlook.
The World Bank upgraded its FY27 projection for India by 50 basis points to 7.1%.
India’s real GDP grew 7.7% in FY26 and expanded by 7.8% in the April–June quarter of FY27.
Gross non-performing assets of scheduled commercial banks fell from a peak of 11.2% in March 2018 to approximately 1.7% by mid-2026.
Registered taxpayers under the Goods and Services Tax rose from roughly 66.5 lakh in 2017 to 1.65 crore by mid-2026.
These cumulative changes help explain why domestic demand has remained resilient even amid higher energy prices and global trade uncertainties. Formalisation and digital payments have broadened the tax base and improved transaction efficiency. Healthier banks can intermediate savings into productive investment more effectively. Better infrastructure lowers the cost of doing business and supports both consumption and investment. The large domestic market, amplified by rising incomes and financial inclusion, provides a stable demand floor. Services continue to leverage India’s skilled workforce and digital platforms, while manufacturing incentives are gradually raising the sector’s contribution. Investment has responded. Gross fixed capital formation (GFCF) has strengthened and private-sector capital expenditure has shown solid signs of revival alongside public investment. The IMF and World Bank both emphasise that continued structural reforms are supporting higher potential growth.
The 7% or thereabouts projections for FY27 by the IMF, World Bank, ADB, OECD, S&P and other international majors, reflect a base of improved fundamentals rather than a temporary rebound. India remains among the fastest-growing major economies and is on track to further increase its share of global GDP. Macroeconomic stability—low NPAs, high reserves, manageable deficits and inflation expected to moderate after a temporary rise—gives policymakers room to support growth. Risks remain. For example, elevated Oil prices (Brent Crude at $114) and geopolitical tensions are always the red herrings. Global growth is very subdued, and capital flows are volatile. Nevertheless, the slew of recent GDP upgrades represents a great validation of Modinomics. The combination of large-scale infrastructure creation, financial-sector repair, tax and insolvency reforms, digital public goods and manufacturing incentives has strengthened the economy’s growth engines and its ability to absorb external shocks. Domestic demand and services provide the near-term support, while demographics, an expanding market and ongoing reforms underpin the medium-term outlook. In a world of slower and more uneven global growth, India’s trajectory under Prime Minister Narendra Modi stands out—not as an accident of one strong quarter, but as the result of sustained institutional and policy change. The 7% plus forecasts for FY27 are therefore both a recognition of India’s economic heft and an endorsement of the robust foundations built over the past twelve years, despite geopolitical headwinds.
Sanju Verma is an economist, national spokesperson of the BJP and the bestselling author of ‘The Modi Gambit’. Views expressed in the above piece are personal and solely those of the writer. They do not necessarily reflect News18’s views.
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In mid-October 2026, the International Monetary Fund raised India’s FY27 growth forecast to 7% while the World Bank and the Reserve Bank of India both projected growth at 7.1%. Other institutions like the OECD, Asian Development Bank, and S&P Global Ratings also converged around the 7% mark.
October 23, 2026, 17:33 IST
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