Economic Uncertainty Looms Ahead as Government Projects Slow Growth

The Indian economy, already facing several challenges, is now staring at a slow recovery in 2026, according to Dharshini David’s latest analysis. The government had pinned its hopes on the economic growth picking up steam by next year, but with the ongoing conflict in Ukraine and rising global inflation, this target may be hard to achieve. David, an economist at Axis Securities, attributes the uncertainty to several factors. “The Ukraine-Russia conflict has led to a surge in oil prices, which is impacting India’s export competitiveness,” she says. “At the same time, the global economy is facing headwinds due to rising inflation and interest rates, which will impact consumer spending and business confidence.” The economic slowdown is also being attributed to the ongoing pandemic recovery, with many states still grappling with the aftermath of Covid-19. The government’s fiscal deficit has increased significantly, putting pressure on the central bank to keep interest rates high. While David expects a slow recovery in 2026, she believes that India can still achieve its growth target by 2027. However, she cautions that this will depend on the government’s ability to implement policies that address the challenges facing the economy. “The government needs to take a multi-pronged approach to address the economic slowdown,” David says. “This includes increasing investment in infrastructure, promoting exports, and implementing policies to boost consumer spending.”