NewsStocksIndia's 'Goldilocks' Economic Phase to Continue Through FY27 with 6.5-7% Growth: EAC-PM ChairmanIndia's 'Goldilocks' Economic Phase to Continue Through FY27 with 6.5-7% Growth: EAC-PM Chairman
Prime Minister's Economic Advisory Council Chairman S Mahendra Dev forecasts India's 'Goldilocks' economic phase to continue for two years, with FY27 growth projected at 6.5-7% and inflation around 4%. Despite the rupee's 5-6% decline in 2025, the outlook remains positive with expected increases in FDI and FPI inflows. Corporate investment announcements reached a decade high of ₹15.10 lakh crore, while merchandise exports grew 2.60% to $292.10 billion in April-November FY26.
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Prime Minister's Economic Advisory Council Chairman S Mahendra Dev has projected that India's favorable economic momentum will continue through the next two years, with growth expected to remain robust at 6.5-7% in FY27. Speaking to Moneycontrol, Dev indicated that the impact of US tariffs on India's economy has been significantly lower than initially anticipated, supporting the positive outlook.
Economic Growth Projections
The Chairman outlined key factors supporting sustained economic growth in the coming years:
| Parameter | FY26 | FY27 | Key Drivers |
|---|---|---|---|
| GDP Growth | 7.40% | 6.50-7.00% | Domestic consumption, public capex |
| CPI Inflation | - | ~4.00% | Low base effect |
According to the statistics ministry's first advance estimate released recently, India's economy is projected to grow 7.40% in FY26. The sustained growth trajectory is expected to be driven by high domestic consumption and continued government focus on public capital expenditure.
'Goldilocks' Phase to Continue
Dev expects India's 'Goldilocks' economic phase—characterized by high growth and low inflation—to persist for the next two years. "Next financial year, CPI inflation could be about 4%, which is not too high given low base, even as growth remains stable," he stated. This balanced economic environment provides an optimal backdrop for sustained development.
Currency and Investment Outlook
Despite the rupee's challenging performance in 2025, where it emerged as Asia's worst-performing currency against the dollar with a 5-6% decline and touching a record low of ₹91.08, the outlook for 2026 appears more optimistic:
- Expected increase in Foreign Direct Investment (FDI) inflows
- Anticipated rise in Foreign Portfolio Investment (FPI)
- Potential rupee appreciation driven by improved capital flows
Corporate Investment Revival
The private sector shows encouraging signs of investment revival. Corporate investment announcements between April and September reached a decade high of ₹15.10 lakh crore. This momentum is exemplified by major announcements such as Google's plan to establish AI data centres in Andhra Pradesh with an investment of $15.00 billion.
Export Performance and Diversification
India's export sector demonstrates resilience through strategic diversification:
| Export Metrics | April-November FY26 |
|---|---|
| Merchandise Exports | $292.10 billion |
| Year-on-Year Growth | 2.60% |
Dev highlighted that India's entry into Free Trade Agreements (FTAs) with various partners has contributed to export diversification, enhancing overall export resilience. "Our exporters have diversified to other countries, and due to which our goods exports in April-November are higher than last year in the backdrop of global uncertainty surrounding trade," he noted.
The Chairman expects continued investment from global corporates in the upcoming fiscal year, particularly in technology and banking sectors, supported by favorable government policies. The combination of export growth diversification and increased corporate investment is expected to contribute positively to GDP growth in the coming years.
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