Strong macros, weak global rewards: Survey flags new growth paradox, says Dharmakirti Joshi, CRISIL

The Economic Survey pegs the Indian economy‘s potential growth rate at 7%, a full 50 basis points higher than projected three years ago. This signals confidence broadly aligned with Crisil‘s own estimate of 6.7%. The survey expects real GDP growth to moderate to 7% in the next fiscal from 7.4% this fiscal. Even so, fiscal consolidation is unlikely to be compromised as nominal GDP growth-the key driver of tax revenues and corporate earnings-is projected to rise to about 10.5% by FY27, compared with 8% expected this fiscal.

Despite a benign macroeconomic backdrop, persistent capital outflows and sharper depreciation of the rupee against the US dollar present a paradox. In this context, the survey observes, “India’s strongest macroeconomic performance in decades has collided with a global system that no longer rewards macroeconomic success with currency stability and capital inflows.”

We believe recent progress-confidence-enhancing measures such as free trade agreements, ongoing structural reforms and a possible trade deal with the US-could help reverse these adverse trends by FY2027. The survey urges policymakers to continue reforms aimed at reducing the compliance burden and promoting deregulation, thereby delivering a sustainable lift to growth needed to achieve the goal of Viksit Bharat by 2047.