India's Economic Surge: GDP Growth to Hit 7.5% in FY26 Amid Global Slowdown

The report from CareEdge Ratings said that healthy FY27 growth is supported by a possible US‑India trade deal, low inflation, low interest rates and tax relief.

Further, the optimistic capex outlook, as evidenced by the strong order books of the capital goods companies, also bodes well for the investment scenario in the economy.

Healthy agricultural activity, reduced income tax burden, rationalisation of GST rates, RBI rate cuts, festive demand, and front-loading of exports supported growth in H1 FY26, the report said.

"We expect the GDP growth to moderate to around 7 per cent in H2 as the impact of front-loading of exports fades and consumption demand moderates post-festival season," it noted.

By the fourth quarter of FY26, the low base effect will wane, and the deflator will also increase from the current low level.

The report forecasted CPI inflation averaging 2.1 per cent in FY26 and rising to 4 per cent in FY27, with the wholesale price index expected to remain flat in FY26 and grow 2.5 per cent in FY27.

It expects the current account deficit to remain around 1 per cent of GDP, adding the government may go a little slower on fiscal consolidation, with the fiscal deficit to GDP likely to be budgeted at 4.2-4.3 per cent in FY27.

Global growth is projected to average at 3.1 per cent over the next five years, staying below the pre-pandemic average of 3.7 per cent, the report noted.

In the next five years, growth in the US, UK, and the Euro Area is projected to be marginally below their historical averages, while China's growth is expected to undershoot its historical average by about 3 percentage points, it added.

- IANS