Daijiworld Media Network - New Delhi

New Delhi, Dec 22: India’s economy is expected to expand at 7.5 per cent in FY26 and 7 per cent in FY27, according to a report by CareEdge Ratings on Monday. The report also forecasts nominal GDP growth of 8.3 per cent for the current fiscal year.

The report cites several factors supporting this growth outlook, including a potential US India trade agreement, low inflation, low interest rates, and recent tax relief measures. A strong investment climate, reflected in robust order books for capital goods companies, is also expected to boost economic activity.

Healthy agricultural output, reduced income tax burdens, GST rationalisation, RBI rate cuts, festive demand, and front-loaded exports contributed to growth in the first half of FY26. The report notes that GDP growth is likely to moderate to around 7 per cent in the second half as export-driven gains fade and post-festival consumption stabilises.

Inflation is projected to remain low, with CPI averaging 2.1 per cent in FY26 and rising to 4 per cent in FY27. The wholesale price index (WPI) is expected to stay flat in FY26, increasing to 2.5 per cent in FY27. The current account deficit is forecasted to hover around 1 per cent of GDP, while the fiscal deficit is expected to be budgeted at 4.2–4.3 per cent of GDP in FY27, reflecting a slightly cautious pace of fiscal consolidation.

On the global front, average growth over the next five years is projected at 3.1 per cent, below the pre-pandemic average of 3.7 per cent. Growth in the US, UK, and Euro Area is expected to remain marginally below historical averages, while China’s growth is projected to fall about 3 percentage points short of its historical trend.

The report underscores that India’s strong domestic demand, fiscal support, and investment momentum will help sustain growth even as global conditions remain moderate.