India’s GDP growth is anticipated to reach 7.5 percent in FY26 and 7 percent in FY27, according to a report released on Monday, which also forecasts an 8.3 percent nominal GDP growth for the current fiscal year.
The report of CareEdge Ratings indicated that the robust growth in FY27 is bolstered by a potential US-India trade agreement, low inflation rates, reduced interest rates, and tax benefits.
Moreover, the positive outlook for capital expenditure, highlighted by the substantial order books of companies in the capital goods sector, contributes favorably to the investment landscape of the economy.
The growth in the first half of FY26 has been supported by strong agricultural performance, a decrease in income tax obligations, the streamlining of GST rates, cuts in RBI rates, festive demand, and increased exports.
The report suggested that GDP growth is likely to decelerate to around 7 percent in the second half due to the diminishing effects of accelerated exports and a slowdown in consumption demand after the festival season.
By the last quarter of FY26, the low base effect will diminish, causing the deflator to rise from its current low level.
The report predicted that the average CPI inflation will be around 2.1 percent in FY26, increasing to 4 percent in FY27, with the wholesale price index expected to remain stable in FY26 and rise by 2.5 percent in FY27.
It was noted that the current account deficit is likely to stay around 1 percent of GDP, and the government may adopt a more gradual approach towards fiscal consolidation, estimating the fiscal deficit to GDP ratio at 4.2-4.3 percent in FY27.
The report also mentioned that global growth is expected to average 3.1 percent over the next five years, remaining below the pre-pandemic average of 3.7 percent.
Over the next five years, growth rates in the US, UK, and Euro Area are expected to fall slightly below their historical figures, while China’s growth is projected to underperform its historical average by approximately 3 percentage points.