India has seen another period of strong growth in the first half of 2026.
Growth of 7.7 per cent in the year to March brings the five-year average to a remarkable 7.8 per cent. Not only is 2026 likely to be another year of India being the fastest-growing economy in the G20, but at 6-per-cent-plus, it is likely to grow at more than twice the rate of the G20 grouping.
From the perspective of Indian markets, 2026 has been a more challenging year. The rupee has depreciated 8 per cent against the US dollar to record lows, and the equity market has fallen 9 per cent against strong rises in some other regional markets.
So which represents the India of today — strong growth or weak markets? Will the real India please stand up?
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To answer the question, let’s take a broader lens.
The disruption of 2026 presents us with something of a natural experiment. How has India performed in 2026, compared with the taper tantrum in 2013?
The Reserve Bank of India (RBI) has held rates in 2026, but in 2013 hiked by a total of 75 basis points. This year India’s consumer price index has risen to 4 per cent, but in 2013 was closer to 10 per cent. The current account deficit will likely be in the 1 per cent to 1.5 per cent of gross domestic product range, but in 2013 it was above 4 per cent of GDP. The $US rose 28 per cent against the rupee in 2013, but in 2026 the move has been a positively pedestrian 8 per cent.
The equity market has been weaker, and foreign equity selling this year has been a record $US30 billion. As an energy importer, and lacking a natural entry into the AI ecosystem, India has been caught between the largest oil supply shock in history and the most aggressive tech boom.
Equity market performance notwithstanding, taken collectively, India’s overall performance has been enviable. It demonstrates the compounding benefits of the reforms India has undertaken over a number of years: the goods-and-services tax, inflation targeting, a less-encumbered banking sector with non-performing loans at a record low 2 per cent of assets, reduction in direct taxes, simplification of the previously complex labour codes and a number of newly inked trade deals. It’s a compelling list.
One would never wish a crisis. But 2026’s silver lining has been an opportunity for India to once again demonstrate the economy of yesterday is no longer the economy of today. With oil prices back at pre-February 28 levels, a much more settled second half is in store for India.
Sometimes progress is best judged from a distance.
Richard Yetsenga is Chief Economist & Head of Research, ANZ
