Finance Ministry lifts FY27 GDP growth estimate to 7.3% and Q2FY27 projection to 7.35%, warns of crude oil price risks

Key facts

• The Ministry of Finance raised India's GDP growth forecast for FY 2026-27 (FY27) to 7.3% from the 6.8-7.2% estimated in the Economic Survey in February 2026, based on the Department of Economic Affairs' nowcasting model.
• The Ministry marginally raised the Q2FY27 (July-September) growth projection to 7.35% from 7.3% in its September report, with official Q2 GDP data to be released by MoSPI on November 30.
• The Indian economy grew 7.8% in Q1FY27 (April-June), and Q2 high-frequency indicators such as industrial output, energy consumption, port traffic, GST collections and automobile sales grew faster than in the previous quarter.
• Total merchandise and services exports grew 11% year-on-year in the month covered, with merchandise exports rising 23.1%, driven significantly by electronics and engineering goods.
• The International Monetary Fund (IMF) raised its FY27 growth forecast for India to 7% from 6.4%, and the Reserve Bank of India (RBI) raised its GDP growth projection to 7.1%.
• Elevated crude oil prices and maritime freight disruptions across West Asian transit routes pose upside risks to input costs; the RBI's direct dollar liquidity supply to public-sector oil marketing companies and curbs on currency speculation may help mitigate imported inflation.
• Household inflation jumped to 5.54% in September from 4.83% in August, and policymakers' focus in the second half of the year is sustaining economic activity while safeguarding price stability amid elevated crude oil prices, higher food inflation and an uncertain kharif crop outlook.
• Supply-side measures such as 'Kanda Express' kharif onion releases, stockholding limits on sugar dealers and customs duty cuts on crude edible oils are expected to ease prices of key kitchen staples; downside risks persist from an intensifying El Niño threatening rabi sowing.