The Reserve Bank of India (RBI) has set a GDP growth projection of 6.7% for the fiscal year 2026-27, a forecast made on August 5. However, following an impressive growth figure of 7.8% for the April-June quarter, many economists are revising their predictions upward, suggesting that the RBI’s estimate may be overly cautious.
Economists have adjusted their growth forecasts over the past few days, with changes ranging from 20 to 80 basis points. The latest consensus now stands at 7.2%, up from the previous 6.7%, based on the assessments of ten economists. Their revised projections fall between 6.9% and 7.5%.
Over the past three years, GDP growth has consistently exceeded 7%, recording 7.3% for 2023-24, 7.2% for 2024-25, and an impressive 7.8% for 2025-26. Should the growth rate surpass 7% in 2026-27, it would mark the fourth consecutive year of robust growth.
Economists Dhiraj Nim and Sanjay Mathur from ANZ noted that the April-June growth figure represents the twelfth consecutive quarter of unexpected positive results compared to market forecasts.
While the RBI had projected a growth rate of 7%, market analysts anticipated a figure closer to 7.3% to 7.5%, with only a few expecting growth as high as 7.8% to 8%. Nonetheless, even those more optimistic forecasters have significantly raised their overall growth expectations for 2026-27. For example, Soumya Kanti Ghosh, the Group Chief Economic Adviser at State Bank of India, has increased his forecast by 70 basis points to 7.3%, having initially predicted an 8% growth for the April-June quarter.
According to Upasana Chachra and Bani Gambhir from Morgan Stanley, “GDP growth has continued to exceed expectations.” They highlighted that the ongoing strength in manufacturing and investment aligns with their perspective that India is on the verge of a capital expenditure upturn.
They further stated that the robust April-June data, along with strong indicators for July-September, suggests a sustained growth trajectory. Consequently, they have revised their forecast for FY27 real GDP growth upward to 7.3% from 6.7%.
Some economists chose not to increase their forecasts, acknowledging potential upside risks but opting for caution amid expectations of a slowdown in the latter half of the year and other uncertainties affecting growth. For instance, the economists at ICICI Securities Primary Dealership, led by A. Prasanna, maintained their growth estimate at 7%, citing five key risk factors: unfavorable base effects, volatile crude oil prices, potential impacts of subpar rainfall on agricultural growth and rural demand, and the adverse effects on Indian exports due to weaker global demand linked to tightening financial conditions.
They also indicated that the RBI might consider adjusting interest rates, as suggested by comments from central bank officials following the Monetary Policy Committee’s meeting in early August.
The RBI’s own growth forecasts for the upcoming quarters are as follows: 6.4% for July-September, 6.5% for October-December, 6.8% for January-March 2027, and 7.3% for April-June 2027.
The next Monetary Policy Committee meeting is scheduled for October 5-7, where the central bank is anticipated to revise its growth predictions for the current year.
Analysts Sonal Varma and Aurodeep Nandi from Nomura expressed that the strong GDP data should enhance the MPC’s confidence in growth while focusing on inflation. They raised a critical question about whether the stronger growth could lead to increased demand-side inflationary pressures, which have been largely absent despite rising input costs.
Recent data indicated that headline retail inflation rose to 4.45% in July, up from 4.38% in June, marking the second consecutive month above the RBI’s medium-term target of 4%. The central bank, which held the policy repo rate steady at 5.25% last month, anticipates inflation averages of 4.7% in July-September, 5.9% in October-December, 5.5% in January-March 2027, and 5.3% in April-June 2027.
Siddharth Upasani serves as a Deputy Associate Editor at The Indian Express, focusing on economic data and trends. He previously worked at Moneycontrol and the financial newswire Informist. In his personal time, he enjoys sports, fantasy football, and graphic novels.
