India's Economic Outlook

India's economic outlook continues to evolve, with Finance Minister Nirmala Sitharaman highlighting the government's unwavering resolve to enhance economic policies. This declaration aligns with the Reserve Bank of India's recent downward adjustment of the FY27 GDP forecast. In a bid to woo foreign investors, the government has unveiled new tax relief on government securities.

New Delhi, Finance Minister Nirmala Sitharaman on Friday said the government is committed to further drive the 'Reform Express' with decisive policy measures to ensure positive economic momentum amid global challenges.

Earlier in the day, the Reserve Bank lowered its GDP forecast for FY27 to 6.6 per cent from the 6.9 per cent estimated in April, citing elevated energy and other commodity prices, as well as continued supply disruptions arising from the West Asia conflict, which are likely to weigh on economic activity.

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However, real GDP is estimated to rise by 7.7 per cent in FY26 (Provisional Estimates), and real GVA has grown by 7.9 per cent in FY26.

Real GDP and Real GVA have been estimated to grow by 7.8 per cent and 7.9 per cent, respectively, in Q4 of FY26.

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Notably, manufacturing, trade, repair, hotels, transport, communication & services related to broadcasting, storage and financial, real estate & professional services sectors have attained double-digit growth at both constant and current prices in FY26.

'Our government, led by Hon'ble PM Shri @narendramodi is committed to further drive the 'Reform Express' with decisive policy measures to ensure positive economic momentum amidst the global challenges,' Sitharaman said in a post on X.

Earlier in the day, the government exempted foreign investors from income tax on interest earnings and capital gains from government securities, as it looked to attract foreign capital to counteract pressure on the rupee.

The government promulgated an ordinance to amend the Income Tax Act to provide tax exemptions on interest income and capital gains arising from the sale, exchange or transfer of government securities, effective from April 1, according to a gazette notification dated June 5.

The exemption would be applicable with effect from April 1 and will apply to any interest or capital gains arising to FPIs on or after April 1 in respect of investments in G-Secs.