Bank of America Upgrades India GDP Forecast To 7.6% on Strong Data, Policy Support

In major sign of confidence in India's economy, Bank of America (BofA) has raised India's economic growth forecast for the fiscal year 2026 to 7.6%, a significant improvement from the previous estimate of 7%, citing a run of stronger-than-expected economic data and continued policy support.

In its latest note, the brokerage firm highlighted that India's incoming data warrants a GDP forecast upgrade, as it indicated broad-based improvements in the nation's economic activity towards the end of 2025.

This comes on the back of data showing India’s GDP expanded by 8.2% in the September quarter, marking the fastest pace of growth in six quarters.

BofA added that policy support is expected to be a big theme going forward, playing a major role in growth improvement. It also noted that the economy is benefitting constantly from a supportive monetary environment, with the Reserve Bank of India, under Sanjay Malhotra, issuing multiple rate cuts in 2025.

This has helped the country sustain momentum alongside a broadly expansionary fiscal stance, the brokerage noted.

Looking beyond the current fiscal year, BofA also upgraded its GDP estimate for fiscal year 2027 to 6.8% compared to the previous estimate of 6.5%.

However, the firm maintained a relative caution with regards to the outlook for FY27, warning that the lagged effect of global trade measures, including potential tariff-related headwinds. It must be noted that India remains one of the few major countries still yet to reach a trade agreement with the United States - something that has impacted sentiment in the domestic market.

BofA further noted that consumption and spending have picked up, alongside firmer investment data. High frequency indicators such as fuel consumption, auto sales and credit growth have shown acceleration as in November and December as well, thus reinforcing the decision to lift near-term forecast.

The upgrade aligns with a broader trend of optimism, as the Reserve Bank of India also recently revised its FY26 growth forecast upward to 7.3%.