India’s GDP likely to grow 6.8–7.2 pc in next fiscal: EY Economy Watch Report

India’s Gross Domestic Product (GDP) is likely to grow between 6.8 and 7.2 per cent in the next fiscal year, according to a report by EY Economy Watch.

The report suggested that to achieve the Viksit Bharat goal by 2047, India may need to significantly increase its tax-to-GDP ratio, primarily through improved tax compliance, as major tax reforms have already been undertaken.

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It noted that significant tax reforms were introduced in the current fiscal year, particularly in personal income tax (PIT) and the Goods and Services Tax (GST) framework.

EY India Chief Policy Advisor DK Srivastava said, “Against the backdrop of India’s extensive bilateral trade agreements with major economies and economic blocs, the country’s medium-term growth prospects have strengthened. We estimate India’s real GDP growth to be in the range of 6.8–7.2 per cent in FY27.”

Both reforms involved considerable revenue foregone, aimed at increasing household disposable incomes to support private consumption demand.

The report further stated that these tax reforms entailed a significant sacrifice in the Government of India’s Gross Tax Revenues (GTR), which are expected to fall short of the Budget Estimates for FY26. Despite concerns over potential revenue shortfalls, the government is widely expected to adhere to its budgeted fiscal deficit target for FY26.

Meanwhile, a recent UBS India Composite Economic Indicator report also noted that India’s economic momentum picked up sequentially during the December quarter, supported by festive season demand and the impact of GST rate cuts.

Early data for January 2026 suggests that this strong momentum has continued into the new year. The analysis indicates that the Indian economy remains on a stable footing, characterised by robust domestic demand and well-contained macroeconomic stability risks.