India

Hindu Business Line | English | News | Jan. 23, 2026 | UndeterminedEconomic Growth

In 2025, India experienced a rare "Goldilocks" phase characterized by moderate and resilient economic growth alongside subdued inflation, supported by stable macroeconomic fundamentals despite global volatility. The Reserve Bank of India’s cumulative 125 basis points repo rate cuts and fiscal, monetary, and regulatory policies have fostered this growth environment, leading to a prediction-defying Q2 FY26 GDP growth of 8.2 percent. Both urban and rural consumption contributed, with rural demand boosted by good monsoons and government incentives. Manufacturing output grew impressively by 9.1 percent in Q2 FY26, driven in part by the Production Linked Incentive (PLI) program, which attracted investments totaling ₹2 lakh crore and generated over 12.6 lakh jobs.

Government capital expenditure remains the primary growth driver, while private capital expenditure is gradually picking up, supported by strong corporate balance sheets, easier banking conditions, and growth in corporate bond markets, which reached $642 billion by March 2025. India’s economic trajectory is fueled by comprehensive reforms including GST rate rationalization, income tax rationalization, labor code streamlining, and policies focusing on clean energy and energy self-reliance. The Insolvency and Bankruptcy Code (IBC), implemented nine years ago, has been pivotal in resolving ₹12 lakh crore of stressed debt and reducing non-performing assets, thereby improving the ease of doing business and enhancing investment attractiveness.

The investor base expanded notably in 2025, with increased participation from younger generations, women, and households in tier-2 and tier-3 cities, reducing dependency on foreign capital. Monthly Systematic Investment Plan (SIP) flows highlight growing retail investment, which supports capital formation and wealth creation. However, foreign portfolio investors showed caution, with net outflows of around $10.4 billion in 2025, exerting pressure on the Indian rupee. Regulatory initiatives such as SEBI’s ‘India Market Access’ platform and RBI’s proposal to expand External Commercial Borrowings framework aim to improve global investor participation and access to capital.

Looking ahead to 2026, India is expected to shift from policy intent to tangible outcomes with ongoing policy easing, regulatory clarity, and FDI openings in insurance and nuclear energy sectors supporting sustained growth. The financialisation of savings and increased capital expenditure in sectors like electronics manufacturing services and defence are anticipated to drive the next investment cycle. Strengthened corporate balance sheets, rising credit demand, and improved earnings position India to leverage its structural advantages and emerge as a significant global growth engine amid ongoing global uncertainty.

The Hindu | English | News | Jan. 23, 2026 | Geopolitical Conflict and Disputes

India has withdrawn the dependents and family members of its officials from its missions in Bangladesh due to a deteriorating security situation. Indian diplomatic posts have faced sustained threats of mob attacks over the past few months, prompting the declaration of Dhaka as a “non-family” station as a precautionary measure ahead of Bangladesh’s February 12 election. Despite these steps, Indian officials stated that diplomatic and consular operations will continue unaffected.

Indian missions in Bangladesh have been targeted in recent months, including over two dozen protests near the Indian High Commission in Dhaka and a stone-pelting incident at the Assistant High Commission in Chittagong on December 18, 2025. The situation worsened following the murder of Sharif Osman Hadi, a radical Islamist youth leader, on December 12. Allegations that his killers fled to India fueled threats and protests against Indian missions in Bangladesh, with retaliatory demonstrations occurring outside the Bangladesh High Commission in India.

India has responded by maintaining heightened police security near the Bangladesh High Commission in New Delhi and tracking developments in Bangladesh closely. Tensions are expected to rise further as the banned Awami League, led by ousted Prime Minister Sheikh Hasina, has resumed activities from Indian territory, including recent and upcoming media engagements in New Delhi by its leaders.

The Hindu | English | News | Jan. 23, 2026 | UndeterminedEconomic Growth

Union Minister Ashwini Vaishnaw stated at the World Economic Forum in Davos on January 21, 2026, that India is set to become the world's third-largest economy in the coming years. Economist Gita Gopinath supported this projection, suggesting the milestone could be reached by 2028 or earlier. Vaishnaw highlighted four pillars driving India’s growth: public investment in physical, digital, and social infrastructure; inclusive societal growth; manufacturing and innovation; and simplification measures. He forecasted India’s growth rate at 6-8% with moderate inflation over the next five years, underpinned by strong technology platforms and inclusive policies that have lifted 250 million people out of poverty.

Both Vaishnaw and Gopinath expressed concern over the potential global impact of high debt levels in wealthy nations, particularly referencing Japan’s recent bond market turmoil. Despite such external risks, they remain confident in India's trajectory toward economic prominence. Gopinath emphasized that the main challenge lies in raising India’s per capita income and achieving long-term development goals by 2047, which will require continued reforms in land acquisition, judicial processes, labor market flexibility, and skill development.

Industrialist Sunil Bharti Mittal echoed the optimistic outlook, noting the importance of a stable and supportive business environment and the growing domestic market. He acknowledged the challenge posed by heightened global competition and the lack of a large foreign market similar to the US for China, stressing the need for India to forge new trade agreements, including with the EU and potentially the US.

Vaishnaw also addressed concerns regarding high US tariffs, emphasizing India’s economic resilience and success in diversifying export markets. He noted India has become an important value chain partner globally, enabling export growth despite protectionist measures elsewhere. Gopinath highlighted pollution as a significant economic and health challenge requiring urgent attention as part of India's developmental agenda.