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India's GDP Growth Projected at 6.8-7.2% for FY27 Amid Global Headwinds

A new EY report projects India's economic growth between 6.8% and 7.2% for the fiscal year 2026-27. This optimism is attributed to expected bilateral trade agreements and government reforms that aim to navigate global uncertainties. The analysis highlights that achieving long-term development goals will require boosting the tax-to-GDP ratio through improved compliance, as major structural tax reforms are largely complete. Furthermore, the government is committed to fiscal consolidation, targeting a reduced deficit of 4.3% of GDP for FY27.

Key Points: India's FY27 GDP Growth Forecast 6.8-7.2%: EY Report

  • GDP growth forecast 6.8-7.2% for 2026-27
  • Bilateral trade agreements to counter global uncertainty
  • Focus on tax compliance over new reforms
  • Fiscal deficit target of 4.3% for FY27
2 min read

India's GDP growth projected at 6.8 to 7.2 per cent for 2026-27: EY report

EY projects India's economy to grow 6.8-7.2% in FY27, driven by trade pacts and reforms, with focus on fiscal consolidation.

"India's medium-term prospects have brightened up - D.K. Srivastava"

New Delhi, Feb 26

India's economy is projected to expand between 6.8 per cent and 7.2 per cent in FY27 as bilateral trade agreements with major economies are expected, along with the government's economic reforms, to counter the global uncertainties created by the US tariff turmoil, according to the latest EY Economy Watch report.

"In the background of India's extensive bilateral trade agreements with other major economies or economic groups, India's medium-term prospects have brightened up," EY India chief policy advisor D.K. Srivastava said.

The analysis noted that achieving the government's long-term Viksit Bharat 2047 vision would require a sustained rise in the tax-to-GDP ratio, primarily through stronger compliance rather than fresh structural overhauls, since most major tax reforms have already been implemented.

The EY Economy Watch report noted that major tax reforms were undertaken in the current fiscal, particularly relating to personal income tax and the GST framework. Both these reforms involved a considerable amount of revenue forgone aimed at increasing household disposable incomes so that private consumption demand could be supported.

These tax reforms involved considerable sacrifice of the Centre's gross tax revenues, which were expected to fall short of the budget estimates for FY26. In spite of the apprehension of this revenue shortfall, the government was widely expected to adhere to its budgeted fiscal deficit target for FY26, the report said.

Finance Minister Nirmala Sitharaman has projected a further reduction in the fiscal deficit to 4.3 per cent of GDP for 2026-27 as the government continues on the path of fiscal consolidation to ensure economic growth with stability.

In her budget speech on February 1, she said that the government had fulfilled its commitment to reduce the fiscal deficit to 4.4 per cent in the Budget for 2025-26 and would now reduce it further to 4.3 per cent as it continues on the fiscal prudence path.

She said that the target reflects a balance between supporting economic momentum and keeping public finances stable. The fiscal deficit represents the gap between the government's total expenditure and its total revenue.

The Finance Minister said that the government would go for net borrowing of Rs 11.7 lakh crore in FY27 from dated securities to fund its fiscal deficit, while the gross market borrowing is pegged at Rs 17.2 lakh crore.

- IANS

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Reader Comments

R
Rohit P
Good numbers on paper, but will the common man feel it? Tax reforms are welcome, but inflation is still biting into our disposable income. Need to see growth in manufacturing and MSME sector.
D
David E
As an investor watching India, this is a very positive signal. The commitment to lowering fiscal deficit while maintaining growth is what international markets want to see. The bilateral trade agreements are a smart move.
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Ananya R
Viksit Bharat 2047 is a great vision. But achieving it needs more than tax compliance. We need massive investment in education, healthcare, and rural infrastructure. Growth should be inclusive.
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Siddharth J
The borrowing numbers are still very high - Rs 17.2 lakh crore is a huge amount. While the deficit is reducing, the overall debt burden on the economy needs careful monitoring. Prudence is good, but let's not compromise on capital expenditure for future growth.
K
Kavya N
Positive news! Hope the bilateral trade agreements materialize quickly to counter the US tariff issues. Our exports need that boost. Also, GST reforms to ease compliance for small businesses would be a big help.

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