India’s Real GDP Growth Projections for FY27

New Delhi, Jan 18: A recent analysis indicates India’s real GDP growth could reach 6–7% in FY27, driven by domestic demand, lowered interest rates, and public capital expenditure.

Based on NSO’s ‘First Advance Estimates’ projecting FY26 nominal GDP at Rs 357.1 trillion (8.0% growth), ICRA anticipates FY27 nominal GDP at Rs 392.0 trillion, reflecting a 9.8% increase.

The fiscal deficit is projected at 4.3% of GDP in FY27, slightly below the FY26 Budget Estimate of 4.4%, assuming sustained nominal GDP expansion.

“The FY27 Budget is likely to prioritize medium-term debt consolidation over short-term deficit targets, particularly ahead of the 16th Finance Commission’s findings,” the analysis noted.

Capital expenditure is forecast to rise by 14% to Rs 13.1 trillion (3.3% of GDP) in FY27, building on FY26’s expected capex overachievement of Rs 11.5 trillion versus the Rs 11.2 trillion target.

This acceleration precedes anticipated fiscal constraints from FY28 onward, influenced by salary and pension adjustments tied to the 8th Central Pay Commission’s revisions.

Gross tax revenues may grow by 7% in FY27, fueled by an 11% rise in direct taxes. Indirect tax growth could slow to 2% due to GST reductions implemented in late 2025.

–IANS