India's GDP seen growing 7.5% in FY26, easing to 6.6% in FY27: Dun & Bradstreet
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India is set to clock 7.5% GDP growth in FY2026, above earlier estimates and the RBI baseline, driven by robust first-half momentum and resilient domestic demand, with demand set to continue, resulting in FY2027 growth of 6.6%, according to the latest India 2026 report by Dun & Bradstreet (D&B), a global business data and analytics company.
Tailwinds in FY27 are likely to be tariff drag and lagging private capex. India’s real GDP surged to 8.2% y/y in Q2 FY2026, even before the impact of GST cuts was fully transmitted into the economic activity. This followed 7.8% growth in Q1, taking H1 FY2026 growth to 8.0%, a six-quarter high and well above last year’s 6.1% and consensus expectations. Manufacturing (+9.1%), construction (+7.2%), and services (+9.2%) led the upside in Q2, supported by benign inflation and resilient consumption.
In terms of consumption, private final consumption expenditure (PFCE) will accelerate in H2 FY2026, supported by tax cuts, festive spending, rural income gains, and the 8th Pay Commission rollout in January 2026.
Investment cycle will see revival as the public capex remains the growth anchor, says the report, adding that structural drivers (PLI and FDI in semiconductors/green hydrogen) remain intact. “Private capex revival is the swing factor for sustaining >6.5% growth in FY2027.”
January 2026
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It described the overall business sentiment in India as “upbeat”, with Indian firms showing the highest share of optimism regarding domestic orders and domestic macroeconomic conditions globally for Q4 2025. In its inflation outlook, the report says CPI is forecasted to average around 3.1% y/y in CY2026, creating a benign price environment and policy space.
In terms of the monetary policy pivot, it says that after the RBI’s 25bps cut in December 2025, which took the repo rate to 5.25%, it is expected to pause through 2026. “Transmission remains gradual (a 60-80bps reduction in weighted-average lending rate for new and outstanding rupee loans by private banks over January-October).”
External sector risks to India’s economy include the US tariffs (effective ~50% as of 3 December) on $48 bn exports, which could shave 1-1.5pps off merchandise export growth if persists. Current account deficit (CAD) seen at 1.0% of GDP, cushioned by services and remittances.
There is also the structural tailwind from estimated $22-23 billion passive debt inflows via JPMorgan Government Bond Index-Emerging Markets (JPM GBI EM) inclusion. “INR (is) under near-term pressure, but medium-term stability expected.”
The agency estimates the FY2026 deficit target at 4.4-4.5% of GDP, with a glide path towards 4.2-4.3% by FY2027. “Capex push continues; revenue risks from tax cuts offset by compliance gains.”