Momentum to sustain, GDP may grow 7.4% in FY27: CEA Nageswaran

NEW DELHI: Chief economic adviser V Anantha Nageswaran Friday raised the growth forecast for the next financial year to 7-7.4% as against 6.8-7.2% projected in last month’s Economic Survey, banking on improved policy certainty due to trade agreements and an improvement in capital flows, along with high-frequency data pointing to sustained momentum in consumption and investment.

He said that the Indian economy was likely to cross $4 trillion next year. The CEA added that recent trends point to improved capital flows, especially when the handicap of India’s low AI exposure is behind it. Govt’s top economist also said the recent trade agreements signed by India will help in the coming months, while also offering policy certainty.

“Because of global uncertainties related to capital flows, the exchange rate had a depreciating (effect) in 2025. With these trade agreements and the second mover advantage that India has in AI ecosystem...so all those things will improve capital flows, stabilise the exchange rates... which will then mean that the dollar value of the Indian GDP will reflect better the true underlying performance of the Indian economy in rupee terms in the years to come,” Nageswaran said. “We also have had the framework agreement with the US (in the meantime). Though the full effect of these trade deals may be felt in 2027-28, there will (still) be a positive impact in terms of capital formation in FY 2026-27, which will spill over into the consumption (as well),” he said.




Citing multiple sets of numbers, he said the growth momentum was expected to sustain. “At the moment, the risk is on the upside in this range. Of course, global uncertainties are the downside risk factor to keep in mind.”

Nageswaran stressed that the focus on policy and reforms, which are in “our control”, have helped India be among the fastest growing G20 countries, paving the way for a “sustained non-inflationary growth of at least 7% in real terms”, post Covid, despite the exchange rate not going in India’s favour in 2025.

On the March quarter GDP growth, Nageswaran said, momentum in the economy is good enough to give a growth rate of 7.3% or more.