The Economic Survey 2026 tabled by Finance Minister Nirmala Sitharaman in the Lok Sabha on January 29 projected India’s real GDP growth for 2026-27 (FY27) in the range of 6.8% to 7.2%. The survey also raised India’s potential growth rate to 7% from 6.5%, a change that carries important implications for monetary policy.
Rana said his firm’s projection for FY27 stands at 6.7%, close to the lower end of the survey’s range, while stating the presence of upside risks amid strong economic momentum. However, “What we would be looking out for is an acceleration of nominal GDP growth. The direction of travel is quite important for us. It should not go from eight to say eight and a half. We want to go towards nine,” Rana said.
He added that a budget assumption of 10.5% nominal GDP growth would be reasonable and not a stretch, given India’s steady-state inflation of around 4.5%, which would allow for a GDP deflator of 3–3.5%.
Pasricha said a credible nominal GDP growth assumption for the budget would be around 10%, based on the survey’s median real growth estimate of 7% and an inflation component of about 3%, in line with the Reserve Bank of India’s target. “The survey itself is claiming that inflation is likely to be somewhat higher, yet stay contained. So, it may probably assume a number which is closer to what the RBI is talking about, that’s close to 4%,” she said.
Pasricha added that while 10% is a credible base, the government could adopt a slightly more optimistic bias and raise the assumption to 10.5%.
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On the upward revision in India’s potential growth to 7%, Rana said S&P Global’s own estimate already lies in the 6.5–7% range. He said the underlying drivers remain unchanged, including improvements in labour force skills, the ongoing demographic dividend and rising competitiveness following new free trade agreements.
However, he believes inflation would continue to dominate RBI’s policy decisions. “From the Central Bank’s perspective, inflation remains the key decision-making driver. They’d like to see inflation within the target range. As long as that happens, they are probably not going to focus too much on the growth story,” Rana said.
For the entire interview, watch the accompanying video
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