Goldman Sachs forecasts India's real GDP growth to moderate to 6.8% in FY27 from 7.3% in FY26, with government data showing FY26 at 7.4% . Private consumption is expected to strengthen due to 2025 measures like income tax relief, GST rationalization, and RBI rate cuts totaling 125 basis points to 5.25% . However, a broad-based private capex cycle may take time amid trade uncertainty and high US tariffs .

Policy Environment and Reforms

India Ratings & Research projects 6.9% growth in FY27, driven by GST reforms, income tax cuts, and FTAs with Oman, UK, and New Zealand . These measures cushion against global headwinds, supporting private final consumption expenditure at 7.6% . S. Mahendra Dev noted a "goldilocks phase" of high growth and low inflation persisting .

Monetary Outlook

Inflation is projected near RBI's 4% target at 3.9%, limiting further rate cuts to possibly 25 basis points if growth risks rise . RBI's easing supports demand, with CPI at 3.8% and WPI at 2.3% per Ind-Ra .

Fiscal Outlook

Fiscal deficit targets 4-4.2% of GDP in FY27, with debt-to-GDP falling to 55.5% . Consolidation continues alongside strong public capex and nominal GDP growth of 9% in FY26 .India has surpassed Japan as the world's fourth-largest economy at $4.18 trillion GDP .