India’s FY26 GDP growth expected to be at 7.5 pc amid resilient domestic demand

New Delhi, Dec 17 (IANS) India’s gross domestic product (GDP) growth is projected to be at 7.5 per cent in the current financial year (FY26) and 7 per cent in FY27, supported by resilient domestic demand and stable macro fundamentals, a report showed on Wednesday.

Meanwhile, inflation is expected to remain benign, with average CPI inflation projected at 2.1 per cent in FY26, before normalising to around 4 per cent in FY27.

CareEdge Ratings projected the current account deficit (percentage GDP) at 1 per cent in FY26 and FY27.

According to the rating agency, the centre will meet its fiscal deficit target of 4.4 per cent in FY26, with continued fiscal consolidation likely to lower it to 4.2–4.3 per cent in FY27.

The 10-year G-sec yields are expected to be in the range of 6.4-6.6 per cent by the end of FY26, while USD/INR is projected to trade around 89-90 by the end of FY27.

“India’s macroeconomic outlook remains constructive heading into FY27. Even with external uncertainties lingering, the Indian economy is expected to record healthy growth of 7 per cent in FY27,” Rajani Sinha, Chief Economist, CareEdge Ratings, said.

The growth momentum will be supported by factors like comfortable inflation, lower interest rates and lower tax burden. Likely US-India trade deal would provide further impetus, Sinha added.

India’s capex cycle is showing early signs of revival as reflected by strong growth in the order book of capital goods companies.

“Foreign investors are also making a note of India’s growth opportunity, getting reflected in a jump in gross FDI inflows into the country, especially in the new age sectors like EV, renewables, electronics, data centre and AI infrastructure. Factor market reforms like the new labour code will give further confidence to domestic and global investors,” the report noted.

According to the report, global economic conditions remain challenging, with global growth expected to stay below pre-pandemic average levels. However, India’s growth is projected to hold up relatively well in comparison with other economies.

–IANS

aps/na