India’s GDP Growth Expected to Reach 7.5% in FY26 and 7% in FY27: Report

India’s GDP growth is projected to reach 7.5% in FY26 and 7% in FY27, with an anticipated 8.3% nominal GDP growth for this fiscal year, as per a report by CareEdge Ratings. The report highlighted that the robust growth in FY27 is backed by factors such as a potential US‑India trade deal, low inflation, low interest rates, and tax relief.
Moreover, the positive outlook for capital expenditure, indicated by the strong order books of capital goods companies, augurs well for investment prospects in the economy. Favorable agricultural activity, reduced income tax burden, GST rate rationalization, RBI rate cuts, festive demand, and increased exports in the first half of FY26 have also contributed to growth, the report mentioned.
However, the report anticipates a moderation in GDP growth to around 7% in the second half of FY26, as the effects of increased exports diminish and post-festive season consumption demand eases. By the fourth quarter of FY26, the low base effect will diminish, and the deflator is expected to rise from its current low level.
In terms of inflation, the report forecasts CPI inflation to average 2.1% in FY26, increasing to 4% in FY27, while the wholesale price index is projected to remain steady in FY26 and grow by 2.5% in FY27. The current account deficit is expected to hover around 1% of GDP, with a possibility of a slightly slower pace of fiscal consolidation by the government, setting the fiscal deficit to GDP ratio at 4.2-4.3% in FY27.
On a global scale, the report predicts an average global growth rate of 3.1% over the next five years, which is below the pre-pandemic average of 3.7%. Notably, growth in the US, UK, and the Euro Area is projected to be slightly lower than historical averages, while China’s growth is expected to fall short of its historical average by approximately 3 percentage points.