Ind-Ra Sees India Growing At 6.9% In FY27, Flags Reforms And Trade Pacts As Key Catalysts

(MENAFN- KNN India) New Delhi, Jan 7 (KNN) India Ratings & Research (Ind-Ra) on Tuesday projected India's economy to grow at 6.9 percent in FY27 (2026–27), citing structural reforms such as the GST, income tax cuts and free trade agreements as key drivers that would also help cushion the economy against global volatility.

Inflation to Stay Benign, Rupee Seen Weakening

Retail inflation is projected to average 3.8 percent in FY27, while an India–US trade deal with reduced tariffs could further lift GDP growth, Ind-Ra Chief Economist Devendra Kumar Pant noted.

For the current fiscal year, Ind-Ra has pegged real GDP growth at 7.4 percent and nominal GDP growth at 9 percent. The Indian rupee is expected to average Rs 92.26 per US dollar in FY27, compared with Rs 88.64 in the current fiscal, reflecting global currency pressures.

Ind-Ra projected the Union government's debt-to-GDP ratio to decline to 55.5 percent in FY27, from an estimated 56.3 percent in FY26. The Centre has outlined a medium-term objective of reducing debt to 50 percent of GDP over the next three to four years.

The ratings agency said recently concluded free trade agreements (FTAs), particularly with New Zealand, the UK and Oman, would help attract foreign investment and keep the current account deficit (CAD) under control.

Union Budget 2026–27: Key Expectations

Pant said customs duty rationalisation and allocations under the Viksit Bharat–G RAM G Act are among the key announcements expected in the Union Budget for FY27, scheduled to be presented on February 1.

He added that the 16th Finance Commission report, which recommends the tax devolution formula between the Centre and states for the five-year period starting April 1, is also expected to be made public on the same day.

Budget Size, Revenues and Fiscal Deficit Outlook

Ind-Ra expects the total Union Budget size to rise to Rs 52 lakh crore in FY27, from the budgeted Rs 50 lakh crore in FY26. However, the revised estimates for FY26 could be lower at around Rs 49 lakh crore, mainly due to a shortfall in tax revenues.

Tax collections are estimated to fall short by about Rs 2 lakh crore in the current fiscal, which is likely to be offset through higher non-tax revenues and marginally lower capital expenditure.

The fiscal deficit for FY26 is expected to remain at the budgeted 4.4 percent of GDP, amounting to Rs 15.69 lakh crore in absolute terms. While the absolute number may rise in the revised estimates, Ind-Ra expects the deficit ratio to be retained at 4.4 percent.

(KNN Bureau)

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