India’s GDP growth may be close to 7% in FY27: RBI’s Poonam Gupta

Gupta said while growth in the first quarter is likely to be upwards of 7% based on the high-performance indicators, some private forecasters have projected growth as high as 7.5%. “It means that a year-around growth rate can be much higher, close to 7%,” she said.

She said the growth outlook comes against the backdrop of a triple shock of higher oil prices, US tariffs and extreme global uncertainty. “You have a possibility of rainfall not being as conducive, and your economy is growing close to 7%. That speaks to the resilience of the economy,” Gupta said, addressing a lecture titled Indian Economy: Shocks, Resilience and the Way Forward, hosted by the Madras School of Economics here on Thursday.

At its Monetary Policy Committee (MPC) meeting earlier this month, the RBI projected real GDP growth at 6.7% for FY27, with growth estimated at 7% in the first quarter, 6.4% in the second, 6.5% in the third and 6.8% in the fourth quarter.

Gupta said domestic growth had accelerated, become more stable and broad-based, while inflation had declined steadily over the past decade and remained relatively stable. Inflation has averaged around 4.8% in recent years, while the rate was particularly benign last year, with near-zero food price inflation bringing headline inflation down to around 2.2%, she said. 

Compared with other countries, India’s inflation rate in recent years has been close to the average for advanced economies and significantly lower than the average inflation experienced by emerging markets and developing economies.  “Our inflation-targeting framework has served us well,” Gupta noted. 

She also noted that the financial sector is not just resilient but has become much more efficient, which was was also evident from the RBI’s extreme stress tests on  banks and financial institutions twice a year. Gupta also highlighted the structural strength of India’s external sector, pointing to the country’s strong services exports, a surplus in net services, healthy remittance inflows and improving merchandise exports.

India’s large and diverse economy, with states leveraging their respective comparative advantages, remains another key strength, she said. The country’s demographic dividend also continues to support growth, while increasing trade fragmentation has prompted India to diversify its base of both exporters and importers.

She said India’s diversified export destinations provide some resilience against disruptions such as US tariffs. “When we had a tariff from the US, we could diversify our pool where we export to,” Gupta said.

Gupta also pointed to improvements in India’s fiscal position and the resilience of the external sector amid global challenges. She said the inflation-targeting framework adopted by the RBI over the past decade had “served us very well”.

Looking ahead, Gupta said India should be able to sustain growth of around 7.5% and aspire to do even better, pointing to the economy’s resilience in the face of multiple global and domestic shocks. 

“Going forward, notwithstanding these shocks, I would say, 7.5% is a given and we should aspire to do better than that,” Gupta added.