India's Economic Growth Projections and Inflationary Challenges Ahead of FY26

The Economic Survey forecasts India's real GDP growth between 6.3% and 6.8% for FY26. A Bank of Baroda report suggests nominal GDP could rise by 9.8-10.3% with inflation adjustments. Efforts to curb inflation include regulatory changes and improved domestic capacities, alongside tackling food price volatility.

The Economic Survey projects India's real GDP growth for FY26 to be between 6.3% and 6.8%. The Bank of Baroda, aligning with these projections, suggests that with a GDP deflator of 3.5%, nominal GDP growth may rise to 9.8-10.3%. This metric is crucial in converting nominal GDP, which factors in inflation, into real GDP, thus reflecting the country's true economic growth.

The Survey's forecast, considered modest, matches the National Statistical Office's 6.4% estimate. This nominal GDP forecast is essential for fiscal planning, influencing key deficit ratios and economic policies. The focus is on sustaining growth through lower business costs, enhanced capacities, and energy transition.

Despite global low inflation in 2024, India faces inflationary pressures from volatile food prices, which contributed 32.3% to inflation in FYTD25. Government actions, such as stock limits, open market sales, and duty-free imports, aim to stabilize food prices. These are vital considerations as the Union Budget is crafted with an eye on growth and inflation management.

(With inputs from agencies.)