New GDP series lifts FY27 growth outlook to 7-7.4%, says CEA Nageswaran

India's GDP growth for FY27 is seen at 7-7.4% under the new series, with risks tilted upward, as strong momentum, reforms and trade deals lift the outlook

India’s economy is now expected to grow by 7 per cent to 7.4 per cent in 2026–27 (FY27) under the new GDP (gross domestic product) data series, a tad higher than the 6.8–7.2 per cent projected in the Economic Survey presented at the end of January, Chief Economic Adviser (CEA) V Anantha Nageswaran said on Friday. The balance of risks is tilted towards the upper end of that range, he reckoned. 

Speaking at the launch of the new national accounts series with 2022–23 as the base year, he said next year’s higher growth expectation comes on top of three consecutive years of 7 per cent-plus growth, and what he repeatedly described as the “sustained, non-inflationary expansion of the Indian economy” in the post-Covid period. 

 

The Second Advance Estimate for GDP for FY26 released by the National Statistical Office (NSO) under the new base year pegged FY26 GDP growth at 7.6 per cent, higher than its First Advance Estimate of 7.4 per cent that was based on the older GDP series with 2011–12 as the base year. 

NSO attributed the overall economic performance in FY26 primarily to robust real growth observed in the second quarter (Q2) (8.4 per cent) and the third quarter, which it pegged at 7.8 per cent. In the near term, Nageswaran underlined that the economy must grow by at least 7.3 per cent in the March quarter (Q4) to meet the revised 7.6 per cent full-year estimate. “I think the momentum in the economy is good enough to deliver us that 7.3 per cent growth rate in the fourth quarter,” he argued.

 

Nageswaran also said that the GDP revisions do not alter the fiscal trajectory that the Union government targets. “With nominal GDP being lowered by, roughly, about Rs 12,000 crore or so, the estimated fiscal deficit for 2025–26 will now be 4.5 per cent, but other indicators such as primary deficit, revenue deficit, effective capital expenditure or capital expenditure to GDP ratios, they all remain broadly unchanged,” he reckoned.

 

The CEA pegged nominal GDP growth to be around 11 per cent in FY27 and said that India is well poised to cross the four-trillion-dollar economy mark “comfortably” in the coming fiscal year. Explaining why the FY27 band was nudged up by 20 basis points on both ends — from 6.8–7.2 per cent in the Economic Survey to 7–7.4 per cent under the new series — the CEA zeroed in on the evolving trade and capital flows backdrop.

 

The framework agreement with the United States and progress on agreements with the European Union and the UK, he said, will reduce uncertainty around tariffs and market access, support exports over the next few years and, crucially, spur capital formation and household spending even before the full export benefits show up.

 

“Although the full-year impact on exports may be felt in 2027–28, there will be some positive impact in terms of capital formation, which in turn will also spill over into consumption. And that is the rationale,” he added.

 

“With these trade agreements, and with the concerns that are now emanating related to the current state of the AI ecosystem in India, what was once considered a drawback in 2025 could actually turn out to be India’s strength from a second-mover-advantage perspective. So all those things will improve capital flows, stabilise the exchange rate, etc., which will then mean that the dollar value of the Indian GDP will reflect better the true underlying performance of the Indian economy in the years to come,” the CEA pointed out.

 

Saurabh Garg, secretary, Ministry of Statistics and Programme Implementation (MoSPI), said the GDP series revision leans heavily on new, more granular data sources and fixes long-debated methodological gaps, including those flagged by the International Monetary Fund (IMF).

 

“So the IMF does a data assessment regularly under the Article IV discussions. So there are three or four major areas of concern which have been highlighted. And I think those concerns have more than well been handled. So I suppose the final assessment is up to them. But on our part, we are confident of the data changes that will come,” he said in response to a query. 

Garg emphasised that the statistics machinery of the country worked to get more accurate state and district domestic product calculations in collaboration with state governments.

 

“We have given a lot more focus in this base revision on having more granular availability of data so that the state domestic product is captured much more effectively and also we are moving towards better estimations of the district domestic product which we hope to work with the state governments over the next few months as we move ahead,” he said.

 

Garg also highlighted digital India’s role in enabling better data capture. Key additions in this regard include the Ministry of Corporate Affairs’ MGT-7/MGT-7A forms for granular corporate activity allocation that goes beyond single-sector profit lumping, three editions of Annual Survey of Unincorporated Sector Enterprises (ASUSE), monthly Periodic Labour Force Survey (PLFS) for informal wages and value addition, and dual Household Consumption Expenditure Surveys (HCES) for per capita benchmarks. 

 

In an effort to capture the informal sector much more effectively, Garg said that two new surveys now available will provide granular data of these activities and help in robust estimation of the same. “Up till now, we were using different indicators for the informal sector because we did not have a specific survey for the informal sector or the unincorporated sector. Now we have two. One is the ASUSE… and the second is the PLFS,” he highlighted. 

 

Garg said India is moving from single to double deflation in agriculture and manufacturing, expanding the number of deflators from around 180 to roughly 600, and committing to publish regular supply-use tables so that long-criticised discrepancies between production and expenditure estimates are “not just reduced, but eliminated”.