India aims to sustain economic growth above 7% this fiscal year, but EAC-PM Chairman S. Mahendra Dev emphasizes that deep structural reforms are vital to maintain this pace. The push is to improve contract enforcement and attract private investment to navigate global economic uncertainties.
India is aiming to keep its economic growth above the 7% mark for the current fiscal year. S. Mahendra Dev, Chairman of the Economic Advisory Council to the Prime Minister (EAC-PM), stated at the recent NCAER India Policy Forum 2026 that while the country's economic foundation remains solid, sustaining this speed requires a new wave of structural reforms. The government is particularly focused on initiatives that encourage private sector participation, which is seen as the primary driver for job creation.
While India recorded an estimated 7.7% GDP growth in the previous fiscal year, officials are monitoring potential roadblocks. The discussion centered on fixing long-standing issues that can slow down business operations. Dev highlighted that contract enforcement in India currently takes significantly longer than in global benchmarks like Singapore. For investors and companies, this matters because certainty and speed in legal dispute resolution are essential for long-term capital allocation and project planning.
The reform agenda also targets specific areas such as labor-intensive manufacturing, semiconductors, defense, and space sectors. By improving the utilization of Free Trade Agreements (FTAs) and reducing regulatory burdens on Micro, Small, and Medium Enterprises (MSMEs), the government aims to boost export competitiveness. Furthermore, a proposed review of the priority sector lending framework—which currently mandates banks to allocate 40% of their lending to specific sectors—could potentially change how financial institutions deploy capital if the government decides to adjust these norms.
Despite the positive outlook, the path forward involves navigating several risks. Global factors, including energy price volatility and geopolitical tensions in regions like West Asia, remain a concern for supply chains. Domestically, the challenge lies in converting healthy corporate balance sheets into actual spending. Private investment has been hesitant, and policymakers believe that lowering the cost of doing business and resolving regulatory bottlenecks is key to unlocking this spending.
Investors should track the timeline for these regulatory changes, particularly regarding contract law and MSME deregulation. These updates will serve as indicators of how quickly the government plans to streamline the business environment. The effectiveness of these reforms in addressing private investment hesitancy and navigating global headwinds will be a primary factor in determining if India can sustain its growth trajectory toward its long-term development goals.