By Admin 
Credit rating agency India Ratings and Research has estimated that India’s economic growth rate may be 6.9 percent in the financial year 2026-27. According to the agency, key structural reforms such as the Goods and Services Tax (GST) and income tax cuts, as well as various trade agreements, will boost economic activity and keep the economy largely insulated from global turmoil.
Devendra Kumar Pant, Chief Economist of India Ratings, said that the environment of high growth rate and low inflation will continue in the next financial year also. The agency estimates that the average retail inflation may be around 3.8 percent. He also said that a low-tariff India-US trade agreement can further boost gross domestic product (GDP) growth.
FTA promotes foreign investment
The agency has estimated real GDP growth at 7.4 percent and GDP growth at market prices at 9 percent based on the base year of 2011-12 for the current financial year. On the currency front, India Ratings expects the rupee to average 92.26 per dollar in FY 2026-27, weaker than the estimated 88.64 per dollar in the current fiscal year.
The agency says that the free trade agreements (FTAs) being made by the government with countries like New Zealand, Britain and Oman will promote foreign investment. This will not only increase foreign direct investment but will also help in keeping the current account deficit under control.
Pant said that rationalization of customs duty and allocation under the ‘Developed India-Ram-Ji Act’ could be among the major announcements in the Union Budget for 2026-27 to be presented on February 1. Along with this, the report of the 16th Finance Commission is also expected to be made public on February 1, in which the ratio of tax transfer between the Center and the states will be proposed for five years starting from April 1.
estimated revenue shortfall
According to India Ratings, there may be a reduction of about Rs 2 lakh crore in tax revenue in the current financial year. This is likely to be compensated through an increase in non-tax revenues and modest cuts in capital expenditure.
The agency said that according to the budget estimate, the fiscal deficit in the current financial year may be 4.4 percent, i.e. Rs 15.69 lakh crore. Although the deficit may increase in terms of amount in the Revised Estimates (RE), but as a percentage of GDP it may remain at 4.4 percent.
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