India Ratings pegs FY27 GDP growth at 6.9% on back of reforms
ADVERTISEMENT
India Ratings and Research (Ind-Ra) today projected GDP growth at 6.9% YoY in FY27 on the back of domestic reforms, including the income tax cut in the FY26 budget, GST rationalisation, and three foreign trade agreements (Oman, UK, and New Zealand).
The agency said the reforms undertaken by the government will help the economy withstand global uncertainties caused mainly by the US tariffs.
El Nino, weak currency, trade disruption downside risk
However, the agency said the El Nino pattern from mid 2026, and weak currency and sluggish global trade growth, along with the high base of FY26, may continue to remain the downside risks to the economy.
“Major headwinds include: the El Niño pattern from mid-2026; a weak currency due to weak capital flows; sluggish global trade growth; strong growth in FY26 (base effect), and slower growth of net production taxes due to GST rationalisation. Another emerging headwind is artificial intelligence,” said Devendra Kumar Pant, Chief Economist and Head Public Finance, Ind-Ra.
January 2026
Netflix, which has been in India for a decade, has successfully struck a balance between high-class premium content and pricing that attracts a range of customers. Find out how the U.S. streaming giant evolved in India, plus an exclusive interview with CEO Ted Sarandos. Also read about the Best Investments for 2026, and how rising growth and easing inflation will come in handy for finance minister Nirmala Sitharaman as she prepares Budget 2026.
“Ind-Ra believes the risks to FY27 growth are evenly balanced. A faster Indo-US trade deal and favourable Indian Ocean Dipole may help minimise the impact of the likely El Niño pattern in mid-2026, pushing GDP growth beyond the estimated. However, if demand revival (consumption and investment) is weaker than expected, GDP growth could decline,” India Ratings said in a note.
“The base year for both GDP and Consumer Price Index (CPI) will be changed to 2022-23 and 2024 from 2011-12 and 2012, respectively in the coming months, and the present economic outlook will be revised once the new base year data is released,” India Ratings said.
Inflation to remain benign this fiscal, FY27
“The inflation outlook in the rest of FY26 and FY27 is benign. Stable agriculture growth and low inflation are likely to keep the rural real wage rate of agriculture in positive territory, supporting consumption growth in FY27,” India Ratings said.
“Low inflation should also maintain real minimum urban wages growth positive (2QFY26: 1.3%), and real wages in non-financial private corporates are likely to rise from the present level (2QFY26: 9.6%). The income tax cut announced in the FY26 budget and GST rationalisation in September 2025 will improve disposable income and help sustain consumption demand,” it added.