EY's Economy Watch has forecast that India's real GDP will grow 6.6-6.8% in the current financial year (FY27), supported by resilient domestic demand, easing global energy prices, and the normalisation of shipments through the Strait of Hormuz, according to a report by the TOI Business Desk.
"We expect, in FY27, real GDP growth at 6.6-6.8 per cent, CPI inflation at 4.5 per cent, nominal GDP growth at 12.5 per cent, Government of India fiscal deficit at 4.4 per cent and current account deficit at 1.5 per cent of GDP," said the EY Economy Watch report.
Macroeconomic Stability and External Sector
The report noted that a gradual normalisation of global energy markets is expected to ease supply-side pressures, improve cost conditions, and support both economic growth and inflation outcomes during FY27. CPI inflation is projected to remain broadly manageable at 4.5%, helped by moderating commodity prices and improving supply conditions.
A moderation in global energy prices and improving external conditions are also expected to support the external sector, with the current account deficit projected at 1.5% of GDP.
| Indicator | FY27 Forecast |
|---|---|
| Real GDP Growth | 6.6-6.8% |
| CPI Inflation | 4.5% |
| Nominal GDP Growth | 12.5% |
| Fiscal Deficit (GoI) | 4.4% of GDP |
| Current Account Deficit | 1.5% of GDP |
Domestic Demand Remains the Key Growth Driver
EY said India continues to demonstrate strong economic resilience despite external uncertainties, backed by robust domestic fundamentals and sustained private sector activity. High-frequency indicators continue to point to underlying economic strength, including:
- Healthy manufacturing and services activity
- Steady credit growth
- Improving industrial output
- Resilient automobile demand
"India's medium-term growth prospects remain supported by strong domestic drivers, with domestic consumption, investment, and services sector performance continuing to play a central role in economic expansion," the report said.
Geopolitical Context and Energy Security
Considering recent geopolitical developments, the report said that if global crude oil prices remain at relatively lower levels and shipments through the Strait of Hormuz normalise, the positive momentum in India's growth outlook is likely to be restored. India's well-developed petroleum refining ecosystem remains a key strength, helping enhance energy security, support petroleum product exports, and reduce external vulnerabilities.
Infrastructure and Strategic Preparedness
"Increased focus on infrastructure development, supply chain resilience, and strategic preparedness may help strengthen India's ability to navigate future geopolitical and economic uncertainties," the report added.
Implications for Executives and Investors
For C-suite executives and investors, the EY forecast suggests a stable macroeconomic environment in FY27, with moderate inflation and manageable fiscal and current account deficits. This backdrop supports continued corporate investment in capacity expansion and infrastructure-linked sectors. The emphasis on domestic demand implies that consumer-facing industries, financial services, and infrastructure are likely to benefit. Energy-intensive sectors may see margin relief from lower global energy prices. However, the outlook remains contingent on geopolitical stability, particularly regarding energy routes.
Next milestone: The report does not specify a next update, but EY's Economy Watch typically issues periodic forecasts. The Union Budget for FY27, expected in February 2027, will provide government fiscal targets.
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