The underlying issues that are still plaguing the economy need to be addressed urgently.3 min readOct 29, 2026 06:00 AM IST First published on: Oct 29, 2026 at 06:00 AM ISTThe underlying momentum in the Indian economy appears to be holding up in a challenging global environment. Several agencies have recently upgraded their estimates for India’s growth this year — for instance, ADB and Moody’s raised their forecasts for the year to 7 per cent, and OECD to 7.1 per cent. In the latest State of the Economy report, economists at the RBI have noted that a range of high-frequency indicators across both the industry and services segments indicate that the economy continues to show strength. There are, however, pain points that must not be lost sight of.GST collections have been healthy. As the RBI report points out, GST revenue has, for four straight months, recorded double-digit growth. Alongside, electricity demand has been robust, and petrol consumption healthy. The index of industrial production has grown at 6.8 per cent in the first half of the year. Demand appears strong in both urban and rural areas — passenger vehicle sales have grown at an impressive pace in both segments, and sales of two-wheelers and tractors have been robust in rural areas. Exports have continued to grow at a good pace — merchandise exports were up 18.5 per cent in the first two quarters of this year, aided perhaps by the fall in the rupee. Government spending has also been supportive — the Centre’s capex grew by 18 per cent during April-August.AdvertisementHowever, a deficit monsoon is likely to impact farm output, while higher input prices will hurt profitability. There are few signs of a broad-based recovery in the private investment cycle. And there is visible weakness in the stock markets. Over the past year, the Sensex has fallen almost 14 per cent. Foreign portfolio investors have taken out $14.6 billion in 2024-25, $19.6 billion in 2025-26 and $17.3 billion so far this year. The rupee has come under intense pressure — it has fallen by around 5.5 per cent this year, and is currently trading around 95.2 per dollar despite several steps being taken by the central bank. Clearly, more needs to be done to shore up investor sentiment and attract foreign capital. Wide-ranging reforms focused on lowering trade barriers, improving the business environment and encouraging private investment, both domestic and foreign, are needed. The underlying issues that are still plaguing the economy need to be addressed urgently. ShareWhatsapptwitterFacebook