Informist Poll
Budget likely to assume 10.1% nominal GDP growth for FY27
This story was originally published at 15:47 IST on 21 January 2026
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By Shubham Rana
NEW DELHI - The government is likely to assume nominal GDP growth of 10.1% for the financial year starting April in the Union Budget to be presented on Feb. 1, according to an Informist Poll of 18 economists.
At 10.1%, the assumed nominal GDP growth for FY27 would be significantly higher than the 8% projected for FY26 in the government's first advance estimate. The government had assumed nominal GDP growth rate of 10.1% in the Budget for FY26 as well, but growth at current prices slowed during the year amid low inflation.
Although nominal GDP growth in FY26 is well below the Budget assumption, the projected fiscal deficit of INR 15.69 trillion will still be 4.4% of GDP because the base-year GDP has been revised upwards relative to the Budget projection. Nominal GDP growth also fell short of the Budget assumption in FY25, when GDP expanded 9.8% at current prices, compared with the Budget estimate of 10.5%.
Despite nominal GDP growth running below the Budget assumption in FY26, economists expect the government to work with a 10.1% growth assumption for FY27, as inflation is expected to firm up. Nominal GDP growth is seen rising in FY27 even as real GDP growth, adjusted for inflation, is expected to moderate.
The International Monetary Fund projects India's real GDP growth in FY27 at 6.4%, lower than the government's first advance estimate of 7.4% for FY26. The World Bank sees real GDP growth in FY27 at 6.5%. The divergence between the nominal and real GDP growth in FY27 is expected to be driven by higher inflation after a sharp decline in FY26.
CPI inflation averaged 1.7% in the first nine months of FY26, down from 4.6% in FY25, while WPI inflation averaged 0.1% during the same period, compared with 2.3% in FY25. As a result, the GDP deflator--which measures changes in the value of goods and services produced in the economy--is estimated to have fallen to a record low of 0.5% in FY26. Economists expect inflation to rise in FY27 due to higher food prices and unfavourable base effects. The Reserve Bank of India has projected CPI inflation at 3.9-4.0% in the first half of FY27.
"Thanks to a sustained decline in inflation over the last one year both in CPI and WPI, we saw the deflator touching the lows of 0.5% in Q3 2025 (Jul-Sept) with the nominal growth of 8.7% yoy (year-on-year) - lowest since the pandemic," BofA Securities India said in a report. Nominal GDP growth is likely to rise in FY27, led by normalisation in WPI inflation, HSBC said in a report.
The nominal GDP growth assumption in the Budget is critical as it forms the basis for key projections for the year ahead, including the fiscal deficit-to-GDP ratio and tax revenue growth. The government is set to release new CPI and GDP series in February, which could affect both official economic projections and the Budget's underlying calculations.
"The Budget is likely to be framed around a nominal GDP growth assumption of about 10.1%, providing some headroom to balance discipline with growth support," Motilal Oswal Financial Services said in a report.
Following are the estimates for nominal GDP growth the government may assume for FY27 in the Budget:
|
ORGANISATION |
FY27 NOMINAL GDP GROWTH FORECAST |
|
ANZ Bank India |
10.0% |
|
BofA Securities India |
10.1% |
|
CareEdge Ratings |
10.1% |
|
DBS Bank |
10.0% |
|
Emkay Global Financial Services |
10.3% |
|
HSBC |
10.0% |
|
HDFC Bank |
10.1% |
|
ICRA |
9.8% |
|
IDFC FIRST Bank |
10.5% |
|
India Ratings and Research |
9.7% |
|
Kotak Mahindra Bank |
10.1% |
|
Morgan Stanley |
10.0% |
|
Motilal Oswal Financial Services |
10.1% |
|
Nomura |
10.0% |
|
Nuvama Wealth Management Ltd. |
9.7% |
|
PNB Gilts |
10.0% |
|
QuantEco Research |
10.4% |
|
Sundaram Mutual Fund |
10.5% |
End
Edited by Rajeev Pai
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