UNDESA PROJECTS STRONG GROWTH FOR INDIA
Why in News?
- The United Nations Department of Economic and Social Affairs (UN DESA) has projected strong economic growth for India in its World Economic Situation and Prospects 2026
- The report states that India’s economy will remain resilient despite higher US tariffs, global trade tensions, and economic uncertainty.
INDIA’S GROWTH PROJECTIONS BY UN DESA
- India is expected to grow at 7.4% in FY 2025–26, driven mainly by:
- Strong domestic consumption
- High public investment
- Medium-term growth projections are:
- 6.6% in FY 2026–27
- 6.8% in FY 2027–28
- These projections place India among the fastest-growing major economies in the world.
KEY DRIVERS FOR INDIA’S GROWTH
Strong Domestic Consumption
- Household demand remains resilient.
- This cushions the economy against external shocks like tariffs and global slowdown.
High Public Investment
- Government spending on infrastructure, defence, digital connectivity, and renewable energy continues to boost growth.
- This has led to strong growth in gross fixed capital formation.
Policy Support
- Recent tax reforms have improved business confidence.
- Monetary easing has supported credit growth and investment in the near term.
IMPACT OF US TARIFF ON INDIA
- UN DESA warned that persistent US tariffs could affect India’s exports from 2026 onwards.
- The United States accounts for about 18% of India’s total exports.
- However, the impact is expected to be limited because:
- Domestic demand remains strong.
- Key exports like electronics and smartphones are likely to remain exempt.
- Growing demand from Europe and the Middle East can offset losses.
INDIA IN THE GLOBAL DEVELOPING ECONOMY CONTEXT
- UN DESA highlighted that India and Indonesia are among large developing economies expected to maintain solid growth.
- Growth in these countries is driven by:
- Resilient domestic demand
- Targeted government policy measures.
GLOBAL ECONOMIC OUTLOOK
- The global economy has shown resilience, but the outlook remains uncertain due to:
- Trade tensions
- Fiscal stress
- Geopolitical risks
- Regional trends:
- Domestic demand and policy easing are supporting growth in the United States and parts of Asia.
- Europe continues to experience weak growth.
- Many developing economies face constraints from high debt levels and climate-related shocks
GLOBAL INFLATION TRENDS
- Global headline inflation is projected to fall:
- To 3.1% in 2026
- From 3.4% in 2025
- Despite easing inflation:
- High prices continue to erode real incomes.
- Food, energy, and housing costs remain major sources of pressure.
- Low-income households are the most affected, increasing inequality.
ABOUT UN DESA
- UN DESA is rooted in the United Nations Charter and guided by the 2030 Agenda for Sustainable Development.
- It upholds the development pillar of the United Nations.
- Headquarters: New York, United States.
Mandate and Work Areas
- UN DESA promotes the social, economic, and environmental dimensions of sustainable development.
- Its work focuses on human progress, especially for the most vulnerable.
- Key thematic areas include:
- Poverty reduction
- Governance
- Finance
- Environment
CORE FUNCTIONS
- Facilitates negotiations among UN Member States on global development challenges.
- Provides support to intergovernmental bodies like:
- UN General Assembly
- Economic and Social Council (ECOSOC)
- Advises governments on implementing UN development frameworks at the national level.
- Works with regional and country partners to support development strategies.
- Collects, analyses, and publishes global economic, social, and environmental data.
KEY REPORTS PUBLISHED
- World Economic Situation and Prospects Report
- World Social Report
- Sustainable Development Goals Report
CONCLUSION
- India is expected to remain a key engine of global growth despite trade tensions and external risks
- Strong domestic demand, public investment, and supportive policies are anchoring economic expansion.
- UN DESA’s projections reinforce confidence in India’s ability to sustain high growth in the coming years.
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