New Delhi: India is expected to deliver another year of relatively strong economic growth in 2026-27 despite the global uncertainties that continue to cloud the outlook, according to a report released by India Ratings and Research on Tuesday.
The report projects India’s real GDP growth to be 6.9 per cent in FY27, easing from an estimated 7.4 per cent in FY26.
According to the agency, India’s strong macro fundamentals and recent policy measures undertaken by the government should help cushion the economy against global risks, particularly trade disruptions due to the US tariff turmoil.
India Ratings said reforms such as income tax cuts announced in the FY26 Budget, GST rationalisation, and the signing of free trade agreements with Oman, the UK, and New Zealand are expected to provide prop up the growth rate.
However, the agency also flagged emerging risks, including the possibility of an El Nino weather pattern from mid-2026, which could adversely impact agricultural production and rural incomes.
It expects the services sector to remain the primary growth engine, expanding at a robust 8.1 per cent, while industry is expected to clock a healthy 6.2 per cent growth. The growth of the agriculture sector has been pegged at 3.1 per cent.
On the demand side, private final consumption expenditure (PFCE), which accounts for nearly 56 per cent of GDP, is expected to rise 7.6 per cent in FY27, slightly higher than the 7.4 per cent estimated for FY26.
On the investment front, while infrastructure sectors such as power, transmission, and logistics are expected to sustain capital expenditure momentum, the agency cautioned that a broader-based investment revival will take time. Sectors such as textiles are likely to see flatter or slower investment growth.
“It will still take at least a year for capex to get broad-based,” India Ratings’ Chief Economist Devendra Kumar Pant said.
The report expects inflation to remain under control. India Ratings forecasts average CPI inflation of 3.8 per cent in FY27, up from an estimated 2.1 per cent in FY26 but still comfortably within the Reserve Bank of India’s mid-point of 4 per cent.
Food price deflation and GST rationalisation have helped keep inflation low so far, but favourable base effects are expected to fade over the coming year.
In this context, the ratings agency noted that additional rate cuts, if any, will be capped at 25 basis points and entirely dependent on incoming data. The RBI has already cut policy rates by 125 basis points over the past year, bringing the benchmark rate down to 5.25 per cent from 6.5 per cent at the start of the year.
As far as the external sector is concerned, the current account deficit is projected to widen modestly to 1.5 per cent of GDP in FY27, from 1.3 per cent in FY26. The rupee is expected to average around Rs 92.3 per dollar during the year.
(IANS)
