New Delhi, Jan 6 (NationPress) India is projected to record another year of significant economic growth in 2026-27 despite prevailing global uncertainties, according to a report published by India Ratings and Research on Tuesday.

The report anticipates India's real GDP growth to reach 6.9% in FY27, a slight decline from the estimated 7.4% in FY26.

The agency notes that India's strong macroeconomic fundamentals and recent government policy actions should help safeguard the economy from global risks, particularly the trade disruptions stemming from the US tariff situation.

India Ratings highlighted that reforms such as income tax reductions revealed in the FY26 Budget, GST adjustments, and the signing of free trade agreements with Oman, the UK, and New Zealand are expected to bolster the growth rate.

However, the agency has also raised concerns over emerging risks, including the potential onset of an El Nino weather pattern in mid-2026, which could negatively affect agricultural output and rural income.

The services sector is anticipated to remain the key growth driver, with an expansion rate of 8.1%, while the industrial sector is expected to achieve a robust 6.2% growth. The agriculture sector's growth is projected at 3.1%.

On the demand front, private final consumption expenditure (PFCE), which constitutes around 56% of GDP, is expected to increase by 7.6% in FY27, marginally higher than the 7.4% estimated for FY26.

In terms of investments, while sectors like power, transmission, and logistics are set to maintain capital expenditure momentum, the agency cautioned that a broader investment recovery will require more time, with sectors like textiles likely experiencing slower growth.

"It will still take at least a year for capital expenditure to become widespread," stated India Ratings' Chief Economist Devendra Kumar Pant.

The report predicts that inflation will remain manageable, with India Ratings forecasting an average CPI inflation of 3.8% in FY27, up from an estimated 2.1% in FY26 but still within the Reserve Bank of India's target midpoint of 4%.

Factors such as food price deflation and GST adjustments have contributed to keeping inflation low thus far, but beneficial base effects are expected to diminish in the coming year.

In this context, the ratings agency noted that any further rate cuts would be limited to 25 basis points and would depend entirely on incoming data. The RBI has already reduced policy rates by 125 basis points over the past year, lowering the benchmark rate from 6.5% to 5.25%.

Regarding the external sector, the current account deficit is projected to widen slightly to 1.5% of GDP in FY27, up from 1.3% in FY26, with the rupee expected to average around Rs 92.3 per dollar throughout the year.