GST 2.0: India's Economy Poised for 6.9% Growth in FY26, Boosted by GST 2.0 and Festive Season

India's economy is set for a significant boost, with Deloitte India predicting a solid growth rate of 6. 7% to 6, while 9% in the current fiscal year (FY26). The annual average growth is projected to be 6, while 8%, an increase of 0. 3% from Deloitte's previous forecast. This optimistic outlook, detailed in the India Economic Outlook Report, highlights the strengthening of. India's economy and its rapid emergence on the global stage, largely attributed to GST 2. 0 and the upcoming festive season.

Key Drivers of Economic Expansion

The report identifies strong domestic demand, accommodative monetary policies, and structural reforms such as GST 2, while 0 as primary catalysts for this growth. India's GDP expanded by an impressive 7. 8% in the first quarter of FY25 (April-June 2025). Rumki Majumdar, economist at Deloitte India, noted that increased consumption during the festive season will fuel demand, subsequently driving private investment as businesses prepare to meet the growing consumer needs, while this forecast aligns with the Reserve Bank of India's (RBI) projection of 6. 8% growth for FY26.

Strengthening the MSME Sector

Despite the positive domestic picture, the report also cautions about persistent global uncertainties that could impact India's growth, while potential trade agreements with the US and EU are expected to bolster investor confidence. However, if the US Federal Reserve maintains high interest rates for an extended period, it could lead to a liquidity crunch in global markets, increasing the risk of capital outflow from emerging economies like India. Plus, 'core inflation' (excluding food and fuel) remaining above 4% could. Limit the RBI's ability to cut interest rates, posing another challenge. Deloitte recommends a shift in policy focus, while while previous policies have concentrated on boosting domestic consumption, the report suggests that greater attention should now be given to strengthening the MSME (Micro, Small, and Medium Enterprises) sector. The MSME sector is crucial for employment generation, income, exports, and investment, and reinforcing it will be vital for achieving sustainable and inclusive economic growth in the long run.