- Chief Economic Adviser sees meeting 4.3% fiscal deficit target for FY27 as challenging but possible
- Nominal growth expected near 12%, while real growth will be lower due to global variables
- West Asia conflict has lowered FY27 growth forecast from 7-7.4% to around RBI's 6.6% projection
Chief Economic Adviser V. Anantha Nageswaran struck a cautious note on India's fiscal consolidation path, telling NDTV Profit that meeting the 4.3% fiscal deficit target for FY27 will be a tough ask, even as he maintained confidence in the economy's underlying strength.
"Meeting the 4.3% fiscal deficit target this year will be challenging. Not impossible, but a tough task," he said.
The CEA flagged that while nominal growth could come in closer to 12%, real growth will be lower. Government expenditure, he added, remains contingent on several variables, including international fertiliser prices.
Growth Outlook Clouded By Conflict
On the FY27 growth outlook, Nageswaran said global uncertainties - particularly the West Asia conflict - have materially altered the picture.
"Before the conflict, we were confident of 7-7.4% growth this fiscal. Growth is now likely around the RBI's 6.6% projection, with downside risks. For this fiscal, 7% growth looks like a stretch," he said.
However, he remains confident that the structural story is still intact.
"Once the conflict subsides and energy prices normalise, growth should move back towards the 7%-plus trajectory seen post-Covid," he added.
On FY26's strong growth print, Nageswaran pushed back against rebasing arguments, calling it a balanced, all-round performance driven by stellar manufacturing and the lagged effect of over a decade of supply-side reforms.
On the rupee, the CEA said India's fundamentals make the currency undervalued at current levels, though he acknowledged short-term market dynamics - particularly the homogeneous view that Asian energy importers are unattractive currency bets - are weighing on it.
Elevated crude prices, he warned, remain a twin risk to both growth and inflation if they persist through the second half of the year.
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