Economy
India's Finance Ministry Sees 7.3% Growth in FY27, Flags Inflation Risks
India's finance ministry expects 7.3% growth in the fiscal year ending March 2027, slightly above the central bank's forecast, while warning that inflation risks remain from food supply, energy prices and a weaker rupee.
Photo: zephyr too / Wikimedia Commons (CC BY-SA 2.0). Photo shows the Mumbai skyline, not the finance ministry.
India's finance ministry expects the economy to grow at a pace of 7.3% in the fiscal year ending March 2027, based on an assessment of current data, it said in its October economic review.
The estimate is marginally above the 7.1% forecast issued by the central bank earlier this month, putting the ministry slightly more optimistic than the Reserve Bank of India about the year ahead.
On inflation, the ministry said near-term price pressures will depend on domestic food supply management, global energy price volatility and liquidity conditions. It also warned that the efficacy of the recent rate hike in containing secondary inflation effects will depend on the central bank's active liquidity management.
Intensifying El Nino poses a downside risk to growth, the ministry said, by threatening soil moisture ahead of the winter sowing season. Rupee pressure persists due to oil prices, portfolio outflows and global uncertainties, though India retains a strong external buffer: foreign exchange reserves stood at $721 billion as of October 16, providing 10.3 months of import cover.
Recent central bank measures to provide dollars to state-run oil companies and curb currency speculation may help limit exchange-rate volatility and imported inflation, according to the review.
Despite the risks, the ministry said persistent geopolitical tensions, energy price volatility and tighter global financial conditions leave India "well-positioned" to sustain its expansionary trajectory.
Source: Reuters
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