Post new series see India's FY27 growth at 7%-7.4%: CEA

Post new series see India's FY27 growth at 7%-7.4%: CEA

India’s FY27 GDP Growth Projected at 6.8–7.2% Amid Global Challenges

India’s Economic Survey 2026 projects real GDP growth of 6.8–7.2% for fiscal year 2027 (FY27), underscoring the economy's resilience amid global volatility, including geopolitical tensions and uneven demand. This follows robust growth of 7.4% in FY26, which exceeded the Reserve Bank of India's (RBI) 7.3% forecast and marked India's emergence as the world's fourth-largest economy, surpassing Japan.

The growth momentum in FY26 was driven by strong investment, manufacturing expansion, and central bank rate cuts totaling 1.25% in 2025, which stimulated credit and demand. Real GDP growth accelerated to 8.2% in the second quarter of FY26, reflecting sustained domestic demand and structural reforms. However, external headwinds, including 50% U.S. tariffs on Indian exports, weighed on labor-intensive sectors such as textiles and gems.

Chief Economic Advisor (CEA) V. Anantha Nageswaran highlighted that real GDP growth has risen from 6.4% pre-COVID (FY12–FY20) to 7.4% in FY26, supported by resilient private consumption and a surge in investment. Private final consumption expenditure (PFCE) grew 7.0% in FY26, while gross fixed capital formation (GFCF) rose 7.8%, reflecting sustained capital formation.

Despite challenges, India's trade diversification efforts are gaining traction. The India-EU trade deal, finalized in 2025, and agreements with the UK, New Zealand, and Oman aim to reduce reliance on the U.S. market, which accounts for 18% of Indian exports. These measures align with broader efforts to integrate into global value chains amid rising protectionism.

Long-term, India faces the challenge of sustaining growth to meet Prime Minister Modi's 2047 development goal, which experts say requires consistent 8% growth. While the RBI estimates 7% as the economy's potential rate, multilateral forecasts—6.5% (World Bank) and 6.6% (IMF)—suggest moderation. Goldman Sachs anticipates growth easing to 6.8% in FY27, even with a hypothetical U.S.-India trade deal.

India's economic trajectory remains a balancing act between domestic strength and external uncertainties, with policy continuity and private investment critical to sustaining momentum.