Nominal GDP growth for FY2026 could be in the range of 10-10.5%.

Government concerns about slowing economic growth may persist in 2025-26 as well, although inflation is expected to decline. Accordingly, the Union Budget 2025-26 may peg nominal GDP growth in the range of 10% to 10.5%.

According to sources, economic growth forecasts are likely to remain at a conservative level of 6.5% to 7% for FY2026, which is roughly in line with the forecast for the current fiscal year, but inflation is expected to ease to 3.5% to 4%.

“Taking all these factors into account, the nominal GDP growth rate is likely to be pegged somewhere between 10% to 10.5%,” a person familiar with the developments said, adding that there was still a fair amount of uncertainty in The external sector as well. .

The nominal GDP estimate for FY2026 is expected to be confirmed, taking into account the first advance estimates of annual GDP for FY2024-25 which will be released on January 7. The nominal GDP growth estimate will also be used to estimate growth. in tax revenue collection as well as other projections, such as the fiscal deficit and debt-to-GDP ratios for the next fiscal year, which will be presented in February.

The 2024-2025 budget expected that nominal GDP in the 2024-2025 fiscal year would grow by 10.5% compared to provisional estimates for the 2023-2024 fiscal year. For FY2024, India’s nominal GDP growth is 9.6%.

Economic activities slowed, and GDP growth in the second quarter of the fiscal year was lower than expected at 5.4%, although growth is expected to rebound in the third quarter of the fiscal year. However, most agencies expect growth in FY25 to be less than 7%.

CareEdge Ratings recently said it expects GDP growth to be moderate but still healthy at 6.5% in FY25 and 6.7% in FY26. S&P Global Ratings also maintained India’s GDP growth forecast at 6.8%. for this fiscal year, but reduced it for the next two years by 20 basis points to 6.7% for FY26 and 6.8% for FY2027.

However, Barclays India said in a report that it expects growth to rebound in 2025 to 7.2% amid easier monetary conditions, stabilizing demand in urban areas, and rising demand in rural areas. He added that risks to growth could come from any further delay in the expected rise in private capital expenditures, given the potential negative fiscal impetus from further reduction in government capital expenditures.