India is likely to record GDP growth of 7–7.4 per cent in FY2027, chief economic adviser V. Anantha Nageswaran said on Friday, raising the outlook following changes in the national income series, including a shift in the base year to 2022-23.

The revised projection represents an upward adjustment of 20 basis points from the 6.8–7.2 per cent growth estimate presented in the Economic Survey in January. Nageswaran said the economy is more likely to achieve growth closer to 7.4 per cent than 7 per cent under the new series.

The improved outlook reflects favourable domestic supply-side conditions and policy certainty arising from India’s trade frameworks and agreements, including those with the EU and the US, which are expected to support exports and economic activity.

Responding to queries on when India could become the world’s third-largest economy, Nageswaran said the country is expected to comfortably cross the $4-trillion GDP mark in FY27 based on current projections. However, the timing will depend on exchange rate movements and the relative growth performance of other major economies.

He noted that growth since Covid-19 has been among the strongest within the G20 economies. However, exchange rate movements—not favourable in FY26—along with global uncertainties could influence the timeline for changes in economic rankings.

“The size of the economy—measured by nominal GDP—is smaller at ₹345 lakh crore compared with ₹357 lakh crore under the old series for this fiscal. In dollar terms, India is slightly below $4 trillion,” Dharmakirti Joshi, chief economist of Crisil, said.

Nageswaran said policy stability stemming from trade agreements is expected to strengthen exports and help stabilise capital flows. He added that the relative absence of a strong AI theme in the capital markets could help attract capital flows in 2026.

On public finances, he said fiscal consolidation remains on track. Fiscal deficit for FY26 is estimated at 4.5 per cent of GDP under the revised series, compared with 4.4 per cent under the previous series. GDP revisions, he said, do not alter the Centre’s fiscal consolidation trajectory. Aditi Nayar, chief economist at Icra, said: "For FY27, the deficit target would be 4.46 per cent against 4.3 per cent assumed in the budget, assuming a nominal GDP growth of ~10 per cent in the fiscal."

Real GDP growth of 7.3 per cent in the fourth quarter would be required to achieve the full-year FY26 growth estimate of 7.6 per cent.