The revised forecast indicates steady macroeconomic performance following a strong 7.8 percent real GDP growth rate recorded in Q1 FY27. Multiple global observers have adjusted their annual outlooks upward, with the World Bank, OECD, and Reserve Bank of India all anticipating 7.1 percent growth for the year. Domestic inflation management remains supported by targeted interventions, such as duty cuts on crude edible oils and Kharif onion releases. Meanwhile, the country's external balance continues to be supported by substantial foreign exchange reserves capable of covering 10.3 months of imports.
Key points
Strong capital inflows recorded between April and August FY27 have effectively financed t…: Strong capital inflows recorded between April and August FY27 have effectively financed the nation's widening current account deficit.
Supply-side measures including stockholding limits on sugar dealers and edible oil duty r…: Supply-side measures including stockholding limits on sugar dealers and edible oil duty reductions are being utilized to mitigate domestic food price pressures.
Global financial institutions including the IMF, World Bank, and OECD expect full-year ec…: Global financial institutions including the IMF, World Bank, and OECD expect full-year economic growth to reach at least 7.0 percent.
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"Following real GDP growth of 7.8 per cent in Q1 FY27, the Department’s nowcasting model, introduced in the Economic Survey 2025-26, nowcasts real GDP growth of 7.35 per cent in Q2 FY27."
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The IMF has raised its FY27 growth forecast for India to 7.0%, while the World Bank, the OECD and the RBI project growth at 7.1%.
West Asia crisis impact
A slowdown in AI-related investment could weigh on global trade given its high import content, as per the report. Meanwhile, the West Asia crisis continues to fuel global inflation, with headline inflation for calendar year 2026 revised up to 4.7% from the earlier projection of 3.7%. Higher inflation could erode real incomes and prompt tighter monetary policy, dampening demand and, in turn, global trade, it further said.
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Efficacy of rate hike
“Near-term inflation dynamics will be shaped by a combination of domestic food…
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