3 days ago
EY Sees India’s FY27 Growth Near 7% Despite Risks
EY thinks India’s economy can grow strongly in the financial year 2026–27.
It expects the economy to expand by about 7–7.2% after adjusting for price changes.
Strong spending by households and the government is expected to help.
Industrial production and factory output improved in June 2026.
Businesses continued to expand in July, but manufacturing and services grew more slowly than in June.
Banks also provided more credit, which can help businesses invest and operate.
Rising wholesale prices and expensive energy could make growth more difficult.
Weaker demand from other countries could hurt India’s exports.
EY says producing more goods at home and promoting exports could make India’s economy more resilient.
EY forecasts India’s real GDP growth at 7–7.2% and nominal growth at 12.5–13% in FY27.
Industrial production grew 7.3% in June 2026, a 23-month high, while manufacturing output increased 7.8%.
Government capital expenditure rose 23.7% in the first quarter of FY27 after contracting 23.3% in the previous quarter.
Manufacturing and services PMI readings remained above 50 in July but eased to 53.5 and 53.3, respectively.
Higher energy costs, weaker global demand, inflation and a potentially wider current-account deficit remain risks to the outlook.
- Who
- EY assessed India’s economic outlook.
- What
- EY forecast resilient FY27 growth while identifying inflation, energy costs, weaker global demand and external imbalances as risks.
- Where
- India.
- When
- The report was published on August 30, 2026, and covers FY27.
- Why
- Domestic demand, public capital expenditure, improving industrial activity and supportive credit conditions are expected to sustain growth despite global and inflationary pressures.
Growth Supports
Risks and Constraints
Economic outlook
Growth Supports
EY expects real GDP growth of 7–7.2% in FY27, supported by domestic demand and public investment.
Risks and Constraints
Geopolitical uncertainty, elevated crude oil prices and weaker global trade could constrain growth.
Recent activity
Growth Supports
Industrial production, manufacturing output, bank credit and government capital expenditure all recorded strong growth in the reported periods.
Risks and Constraints
Manufacturing and services PMI readings declined in July, indicating that expansion continued but momentum moderated.
External position
Growth Supports
Import substitution, domestic value addition and export promotion could strengthen India’s external position over time.
Risks and Constraints
Higher energy costs and softer global demand could pressure exports and widen the current-account deficit to around 1.9% of GDP.
Key facts
- Real GDP forecast
- 7–7.2% growth in FY27
- Nominal GDP forecast
- 12.5–13% growth in FY27
- Industrial production
- IIP growth reached 7.3% in June 2026, a 23-month high
- Manufacturing output
- Output increased 7.8% in June 2026
- Government capital expenditure
- Growth rose 23.7% in the first quarter of FY27 after contracting 23.3% in the fourth quarter of FY26
- Inflation
- Consumer inflation was 4.4% in July, while wholesale inflation was 9.8%
- Current-account deficit
- The OECD projects a possible deficit of 1.9% of GDP in FY27
Sources
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