Trump tariffs – Govt stands by budget estimates despite geopolitical headwinds: Finance Ministry official

Despite geopolitical headwinds, the Finance Ministry remains confident that India’s GDP growth will stay within the projected range of 6.3-6.8 per cent for FY26, according to ministry sources who told Business Today TV.

Describing the current challenges as a “temporary setback,” officials are optimistic that upcoming bilateral trade negotiations with the US will help mitigate the impact.

While the government acknowledged that tariffs could dampen demand, it remained hopeful that global energy prices and tax reductions in the US will help offset the effect.

When asked about potential incentives for industries affected by declining exports, the official noted that MSMEs are the most impacted, as they lack the capacity to absorb losses, whereas larger corporations can sustain the pressure for some time. Although no immediate relief measures are planned, the government will meet exporters soon to assess their concerns.

The government’s confidence also stems from its CAPEX outlook. Despite a steep decline in capital expenditure utilisation in the first half of FY25, it expects to exceed the revised CAPEX target of Rs 10.18 lakh crore for the fiscal year. The target was revised down from Rs 11.1 lakh crore in the Union Budget 2025-26. For FY26, the government has allocated Rs 11.21 lakh crore toward capital expenditure.

“Tax cuts announced in the budget and increased CAPEX will help us for FY26,” an official shared, reinforcing the government’s optimism in sustaining economic momentum.

The Economic Survey tabled in the parliament on January 31 projected India’s GDP growth at 6.3-6.8 per cent in FY26.