BofA pegs India's GDP growth at 7.6% in FY26, 6.8% next year

BofA Upgrades India’s GDP Growth Forecast: Given the continued growth in the Indian economy on the back of strong policy reforms and robust consumption, the Bank of America (BofA) has raised the country's GDP growth forecast for FY2026 to 7.6 per cent from its earlier estimate of 7 per cent. BofA has also raised its estimate of India's GDP for FY27 to 6.8 per cent, compared to the earlier estimate of 6.5 per cent for FY27.

Incoming Data Signals Broad-Based Recovery

In its latest note, the global brokerage firm said that the country's incoming data "warrants a GDP forecast upgrade" as they indicate a broad-based recovery in India's economic activity by the end of 2025.

Add Zee Business as a Preferred Source

Stronger Q2 Growth Lifts Outlook

The growth outlook has improved after India's economy grew by a stronger-than-expected 8.2 per cent in the second quarter. This has resulted in an increase in growth projections for 2025-26. The Reserve Bank of India (RBI) has raised its GDP growth forecast for the economy to 7.3 per cent.

Policy Support Seen as Key Growth Driver

The policy support is expected to become a major issue going forward, according to the Bank of America note, playing a key role in improving growth.

Rate Cuts, Fiscal Support Boost Momentum

The economy has benefited constantly from a supportive monetary environment, with the Reserve Bank of India, under its Governor Sanjay Malhotra, issuing multiple rate cuts in 2025. This has helped the country maintain momentum along with its broadly expansionary fiscal stance, the brokerage firm said in its note.

Consumption, Investment Show Improvement

The BofA note further said that, along with strong investment figures, consumption and spending have also picked up.

High-Frequency Indicators Strengthen Case for Upgrade

High-frequency indicators such as fuel consumption, auto sales and credit growth also saw an uptick in November and December, supporting the decision to raise the near-term forecast.

Revised GDP, Inflation Series Awaited

The government is going to release a new inflation series along with the new GDP series. The revised National Accounts Framework will also include back-series data for 2022-23, 2023-24 and 2024-25, enabling consistency and comparability.

Limited Impact Expected from Data Revision

However, the government does not expect any significant changes to India's GDP growth estimates after the release of the revised national accounts series in February next year.

FAQs

Q1. Has the Bank of America upgraded India's GDP growth forecast?

Yes, the BofA has increased the country's GDP growth forecast for the financial year 2026.

Q2. BofA increased its GDP growth forecast by how much compared to its previous estimate?

According to BofA estimates, the country's new GDP growth forecast for FY2026 is 7.6 per cent, up 0.6 per cent from its earlier estimate of 7 per cent.

Q3. Will the revised GDP and inflation series change India’s growth numbers?

The government has indicated that the revised national accounts framework is unlikely to result in any significant change to India’s GDP growth estimates.

With IANS Inputs