Last Updated on January 10, 2026 1:09 am by INDIAN AWAAZ
BIZ DESK
India’s economy shows limited signs of a clear recovery and is facing new external risks, particularly from US President Donald Trump’s aggressive trade stance, former Chief Economic Adviser Arvind Subramanian has warned, even as the government projects optimism over what it calls a “Goldilocks moment.”
The Union Ministry of Statistics and Programme Implementation’s First Advance Estimates have pegged GDP growth at 7.4 per cent for FY26, marginally higher than the Reserve Bank of India’s 7.3 per cent forecast and above the government’s earlier projection range of 6.3–6.8 per cent. However, Subramanian urged caution in interpreting the data, citing the use of an unusually low deflator in GDP calculations, which raises questions about how inflation has been adjusted.
Speaking to Bloomberg, Subramanian said it is “not obvious that the economy is recovering,” though he added that if the growth numbers hold next year, India should consider itself fortunate given global uncertainty.
A key risk, he noted, is US trade policy. India, the US’s largest export partner, faces punitive tariffs of up to 50 per cent, reportedly linked to India’s purchase of Russian oil and broader trade negotiations. The situation could worsen, Subramanian warned, as tariff rates may rise further amid possible US sanctions on countries trading with Russia.
He also highlighted concerns over Chinese mercantilism flooding developing markets with low-cost goods, fiscal pressures at home, and the need for greater rupee flexibility to support exporters.
Meanwhile, global investors remain cautious, with Goldman Sachs projecting India’s growth to slow to 6.8 per cent in FY27.