As hefty US tariffs cast doubt on forecasts, India's financial markets and economy are providing contradictory signals about the economic outlook, making it more difficult for officials to encourage activity.
The GDP probably grew by more than 7% last quarter, while inflation is at a historic low of less than 1%, mostly due to a sharp decline in food prices. While the stock market is booming, the rupee has fallen to an all-time low of almost 90 to the dollar. After the government lowered taxes last month, imports increased, but exports fell.
As exporters witness a decline in US orders, President Donald Trump's harsh 50% tariffs—the most among most major economies—have affected sentiment.

According to Dhiraj Nim, an economist at ANZ Banking Group Ltd., "the dichotomy of message from various indicators alludes to the fact that the economy is not likely firing on all cylinders." "Some business segments complain about declining order books and investment appetite, while others report strong results."
Thus far, the administration has adhered to its projections, which call for growth of 6.3% to 6.8% for the year ending in March. According to economists polled by Bloomberg, data scheduled for release on Friday may indicate that the economy grew by 7.4% during the July–September quarter.

Indian stocks were up in early trade on the morning of the GDP data release, and the benchmark NSE Nifty 50 Index was on its way to a new all-time high. Due to advances in banking and metal firms, local equities have been rising for the majority of this month.
However, some sectors' fundamental weaknesses are hidden by the top numbers. Government spending, which has increased by 40% so far this fiscal year, is driving growth, but private investment is still slow, according to ratings agency CareEdge.
Even though consumption increased by 7% during the April–June quarter, it was still less than the 7.8% growth in the GDP as a whole.

According to Alexandra Hermann, head economist at Oxford Economics Ltd., "consumption is growing, it's doing good, but it could be so much better." "In a nation like India, consumption growth should ideally outpace GDP growth."
Short-term increase
Spending was temporarily boosted by tax cuts on goods and services in September before to the holiday season. Car sales and two-wheeler registrations all reached monthly records, and GST receipts increased by almost 4.6% from the previous year to approximately ₹2 trillion in October, the biggest amount in five months. However, economists doubt the sustainability of that momentum.

According to Aurodeep Nandi, an economist at Nomura Group in India, "the GST cuts and festive demand unsurprisingly showed up in resurgent sales, but cumulative performance across August to October, which discounts pent-up demand, points to a more measured pickup."
A long-term impasse could be detrimental to the outlook, but a trade agreement with the US could improve sentiment by eliminating uncertainty.
"We shouldn't minimize the risks associated with tariffs, which have started to manifest and could get worse if a trade agreement isn't reached soon," Nim stated. He continued, citing the growing strain on exports, "the ramifications for jobs and incomes in the low skilled sectors can be profound."

The International Monetary Fund has lowered its forecast for India's growth in the upcoming fiscal year, despite New Delhi officials' repeated claims in recent weeks that a trade agreement with Washington is near.
Due to high US tariffs, the Washington-based lender projects that the economy would grow by 6.2% in the year beginning in April, compared to its July estimate of 6.4%. However, Indian authorities pointed to the nation's capacity to access alternative export markets, viewing the IMF's growth impact projection as exaggerated.

According to Soumya Kanti Ghosh, chief economist at State Bank of India and a member of the prime minister's advisory panel, India's market shares are growing in the UAE, China, Hong Kong, and other Asian economies that purchase marine products, "suggesting that diversification will increasingly buffer India against external shocks."
Following the recent execution of long-awaited labor reforms that are anticipated to promote manufacturing and employment, the Modi government is also seeking to push through a dozen important laws in the forthcoming parliament session to encourage investment.