Business EconomyPosted at: Mar 6 2026 10:31PM


India’s real GDP growth outlook upgraded to 7.0-7.4pc for FY27: Monthly Economic Review

New Delhi, Mar 6 (UNI) India’s real GDP growth outlook has been upgraded to 7.0-7.4 pc for FY27 even as external uncertainties remain an important factor shaping the outlook, said the Monthly Economic Review (MER) released by the Department of Economic Affairs (DEA) on Friday here.
This upward growth projection is driven by recent successful trade deals and consecutive strong growth of 7 (plus) over the previous three years.
The report noted that the macroeconomic environment remains characterised by stable growth, contained inflation and continued reform momentum.
Commenting on the consequences for India in the backdrop of the recent US-Israel-Iran unrest, the MER said, "The implications of this conflict for India are significant and may be longer-lasting in ways that are not immediately understood."
Applauding the budget 2026-27, it said, “Policy framework articulated in the union Budget 2026-27 provides a strong anchor for sustaining investment-led, employment-oriented and inclusive growth."
It said the economic activity in January remained broad-based with high-frequency indicators pointing to sustained momentum.
The report noted that the period witnessed manufacturing expansion, which was supported by strong order books and capacity utilisation above long-run averages and services activity remained robust amid improving demand conditions.
Pointing towards the budget which was released last month, it said, “At a time of heightened global uncertainty and shifting economic dynamics, the union Budget 2026-27 positions India’s policy framework around stability, resilience and inclusive growth.”
“Building on the reform momentum of recent years, the Budget advances a calibrated strategy that combines fiscal prudence with targeted interventions to sustain growth, strengthen productivity and strategic resilience and expand economic participation."
The Economic Review also noted the introduction of revised Gross Domestic Product (GDP) and Consumer Price Index (CPI) series, which are strengthening the measurement of economic activity and inflation dynamics.
“Inflation under the new CPI 2024 series firmed moderately in January 2026 to 2.75 per cent, reflecting normalisation in food prices, but remained within a broadly benign range.”
The new GDP series shows a smaller but steadfast economy, especially post-pandemic, with three consecutive years of growth above 7 per cent.
Coming to fiscal policies, the report said that it continues along a consolidation path while maintaining expenditure quality.
“During April-Jan FY26, Fiscal capital expenditure grew by 11.2 per cent while revenue
expenditure remained contained. The fiscal deficit up to January was lower than in the
corresponding period of the previous year, reflecting improved fiscal management.”
Building on this momentum, the budget 2026-27 continues the fiscal consolidation trajectory while sustaining capital spending to support infrastructure-led growth and macroeconomic credibility.
The Economic Review noted that recommendations of the 16th Finance Commission further support this approach by emphasising responsible federalism, fiscal self-reliance and improved expenditure efficiency at the state level.
“In January 2026, the trade policy uncertainty index increased by 33.2 per cent on a month-on-month basis, following four consecutive months of decline” said MER.
The economic review said that trade policy uncertainties remain the defining feature of external environments.
“FDI inflows strengthened in April-December FY26, even as portfolio flows stayed negative before turning positive in February. At the same time, foreign exchange reserves remain comfortable, providing cover for more than 11 months of goods imports,” it said.
Monetary and financial sector conditions have remained positive with further strengthening of bank credit growth.
The reforms announced in Budget 2026-27 will deepen financial markets, enhance efficiency and strengthen financial intermediation to better support India’s evolving growth requirements.
Highlighting the labour market developments, the Monthly Economic Review said, “Employment increased to an average of 57.4 crore persons in Q3 FY26, including rising female participation, while high-frequency indicators suggest stable hiring trends in emerging service sectors.” UNI SAS SSP
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