India's GDP growth to slow down to 7.1% in FY27
What's the story
India's economic growth is projected to slow down slightly, with the real gross domestic product (GDP) expected to expand by 7.1% in fiscal year 2026-27 (FY27). This is lower than the previous year's estimate of 7.6%, according to a report by Crisil Intelligence presented at the 10th India Outlook Conclave. The forecast indicates that strong domestic demand and consumption will continue to drive India's growth momentum despite global uncertainties such as geopolitical tensions and rising protectionism.
Growth drivers
Crisil Intelligence's growth forecast based on 4 key assumptions
Crisil Intelligence's growth forecast for India is based on four key assumptions. These include a normal monsoon, stable food inflation despite a low base, Brent crude prices averaging between $75 and $80 per barrel, and steady global economic growth. Domestic demand is expected to be the main driver of expansion in FY27, with fiscal measures aimed at boosting disposable income likely to support consumption and economic activity.
Economic pillars
Public infrastructure spending to be major growth driver
Public infrastructure spending is expected to be a major growth driver, accounting for around 3.1% of GDP. The investment cycle is also slowly moving beyond public infrastructure into manufacturing and new technology sectors. Crisil Intelligence estimates that industrial capital expenditure could increase to around ₹9.1 lakh crore annually between FY27 and FY31, as private investment picks up steam.
Investment surge
Investments in emerging sectors expected to witness strong growth
Emerging sectors are expected to witness strong growth within the broader investment cycle. Investments in semiconductors and electronics manufacturing could increase by 4.7 times, while EV manufacturing and charging infrastructure may grow by 3.1 times, and advanced chemistry cell (ACC) batteries could expand by 3.3 times during this period. Exports are also expected to remain steady, backed by the services sector and new trade agreements with a target of doubling exports to ₹80 lakh crore by FY31.
Economic challenges
Corporate revenue growth could remain moderate at around 8-9%
However, Crisil Intelligence notes that corporate revenue growth could remain moderate at around 8-9%. This is partly due to pricing pressures in commodity-linked sectors. Rising energy prices are a major risk, with any sharp spike in crude oil and gas prices likely to impact EBITDA margins in energy-intensive sectors such as airlines, chemicals, and fertilizers.
Investment sustainability
Policy consistency and healthy corporate balance sheets crucial for India
Crisil Intelligence stresses the importance of policy consistency and healthy corporate balance sheets in sustaining India's next investment cycle amid a volatile global environment. The report also highlights that the ongoing conflict in West Asia could pose a downside risk to India's economic outlook due to its impact on crude oil and commodity prices. Despite these challenges, India's real GDP growth is expected to remain healthy and slightly above potential at 7.1% in FY27.