India is poised to cross the $4 trillion GDP mark in 2026–27, with nominal growth projected at close to 11%, Chief Economic Advisor V Anantha Nageswaran informed in a press briefing on Friday.
The Economic Survey's real GDP growth projection for the year has been revised upwards to 7–7.4% under the new GDP series, compared with the earlier estimate of 6.8–7.2% under the old series.
The CEA noted that the economy continues to maintain strong growth momentum, supported by broad-based economic activity. All key parameters, he said, indicate that India will be able to sustain growth around 7.6% on the current trajectory.
According to Nageswaran, both consumption and investment will remain key growth drivers in FY27.
Rural and urban consumption have shown resilience. Tractor sales point to strengthening rural demand, while robust UPI transactions and domestic air passenger growth reflect sustained urban spending.
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On the investment front, growth rates have held up, with private sector investment in machinery and equipment accelerating in FY25. Unincorporated enterprises have also maintained investment in machinery, indicating depth in the capex cycle beyond large corporates.
Manufacturing has been particularly robust over the past three years, with what he described as “exemplary” growth rates. While the services sector has moderated slightly, it continues to remain in expansionary territory, as reflected in Purchasing Managers' Index (PMI) readings for both manufacturing and services.
High-frequency indicators reinforce the positive outlook. E-way bill generation is on par with pre-Covid levels, while non-food bank credit, electricity consumption, and petrol and diesel demand have held up well. Hotel occupancy rates, air cargo volumes and port traffic also suggest that economic activity is not slowing.
Steel and cement production remain on a strong footing, signalling sustained construction and infrastructure demand.
On the macroeconomic front, favourable supply-side conditions are expected to keep inflation low and stable. These include robust rabi sowing, comfortable foodgrain stocks and easing global commodity prices.
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Fiscal consolidation remains on track, with the fiscal deficit estimated at 4.5% of GDP for 2025–26 (Revised Estimates) under the new series, without compromising on capital expenditure.
The CEA also highlighted improved policy certainty following successful trade negotiations. Progress on India–US and India–EU trade agreements is expected to support exports and capital flows. Merchandise exports are likely to improve in the coming financial year, although the full-year impact may be visible only in 2027–28.
Uncertainties around capital flows, he added, are likely to ease following the framework agreement with the US, potentially providing a positive impulse to capital formation.
Despite global headwinds, Nageswaran said there are no major concerns around trade-related activities at present. The combination of strong domestic demand, resilient investment, improving export prospects and macro stability positions India to sustain high growth.
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