Mumbai: India’s real gross domestic product (GDP) is projected to grow at a healthy 7.5 per cent in FY26 before moderating to around 7 per cent in FY27, according to a report released by domestic rating agency CareEdge Ratings. The agency said India’s macroeconomic outlook remains constructive despite global uncertainties.
CareEdge Chief Economist Rajani Sinha said the Indian economy is expected to maintain strong momentum heading into FY27, supported by comfortable inflation levels, easing interest rates and a lower tax burden. She added that a potential US-India trade deal could provide additional support to growth prospects.
Currency Outlook and Inflation Trends
The agency also expects the Indian rupee, which has recently touched record lows and breached the 91-mark against the US dollar, to appreciate in the medium term. According to CareEdge, the rupee is likely to strengthen to the 89–90 range by FY27, aided by stable macroeconomic fundamentals and improving capital flows.
Capex Revival and Investment Climate
CareEdge noted early signs of revival in the capital expenditure cycle, reflected in strong order book growth among capital goods companies. Rising gross foreign direct investment (FDI) inflows further indicate growing global confidence in India’s growth story. The agency said ongoing market reforms, including the implementation of new labour codes, are expected to boost investor sentiment both domestically and internationally.
Growth Moderation in Second Half of FY26
While GDP growth in FY26 is projected at 7.5 per cent overall, the agency expects growth to moderate to around 7 per cent in the second half of the fiscal year. This moderation has been attributed to fading export front-loading effects and a normalisation of consumption after the festive season.
Exports, Current Account and Fiscal Deficit
India’s goods exports are expected to contract by around 1 per cent in FY26, compared to marginal growth of 0.1 per cent in FY25, largely due to declining merchandise exports to the US. However, exports of tariff-impacted sectors such as gems, jewellery and textiles have seen increased traction in markets like Hong Kong and the UAE. CareEdge flagged shifting export market dynamics as a key area to watch.
The agency expects the current account deficit to remain manageable at around 1 per cent of GDP in both FY26 and FY27. On the fiscal front, it said the central government is on track to meet its fiscal deficit target of 4.4 per cent of GDP in FY26 and may further narrow the gap by up to 0.2 percentage points in FY27.
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