Ind-Ra Projects India's GDP Growth at 6.9% in FY27, Goldilocks Situation to Persist

India Ratings & Research (Ind-Ra) on Tuesday projected Indian economy to grow at 6.9% in the 2026-27 fiscal year beginning April 1 saying key reforms like GST and income tax cuts, and trade pacts will act as economic catalyst and shield economy from global turbulence.

The economy will continue to be in 'Goldilocks' situation of high growth and retail inflation averaging 3.8% in the next fiscal as well, and Indo-US trade deal with reduced tariffs will add to the GDP growth numbers, said Ind-Ra, Chief Economist, Devendra Kumar Pant.

For the current fiscal, Ind-Ra projected real GDP growth at 7.4%, while nominal GDP expansion at 9%.

Ind-Ra expects the Indian Rupee to average 92.26 to a dollar in FY27, higher than 88.64 to a dollar in the current fiscal.

The Union government's debt as a percentage of GDP is projected to come down to 55.5% in FY27, from an estimated 56.3% in the current fiscal.

The government estimates to bring down debt to 50% as a percentage of GDP over the next 3-4 years.

Ind-Ra also said that the Free Trade Agreements (FTAs), especially with New Zealand, UK and Oman, entered into by the government will boost foreign investment and help to keep Current Account Deficit (CAD) lower by attracting more foreign investments.

Pant further said that customs duty rationalisation, and allocation under Viksit Bharat- G RAM G Act, would be the key announcements expected in the Union Budget for 2026-27 scheduled on February 1.

Also, the report of the 16th Finance Commission, which has suggested the ratio of tax devolution between Centre and states for five years beginning April 1, too would be made public on February 1.

Ind-Ra expects the total budget size to rise to ₹52 lakh crore in FY27, from budgeted ₹50 lakh crore in FY26. It expects the revised estimates for FY26 to have a lower budget size of around ₹49 lakh crore on shortfall in tax revenue.

It estimates tax revenues to fall short by ₹2 lakh crore in the current fiscal, which will be made up from non-tax revenue collection and slightly lower capex.

Fiscal deficit in current fiscal will be at budgeted 4.4% and ₹15.69 lakh crore in absolute terms.

Ind-Ra expects the absolute number to go up in the Revised Estimates (RE), although in percentage terms 4.4% deficit would be retained in RE.