The Budget for 2027-28 (FY28) will likely assume that nominal GDP grows by 10.5 to 11 percent, a senior government official told .
“The nominal GDP figure would be a realistic estimate, taking into account the inflation and growth dynamics,” the official said.
For the current year, nominal GDP growth is expected to be 11 to 11.5 percent. The Budget had assumed 10 percent. Finance ministry officials expect real GDP growth in FY28 to be between 6.5 and 7 percent.
What these terms mean
Nominal GDP is the total value of all goods and services made in a country in a given period, counted at current prices. Real GDP is different, because it removes the effect of price rises.
Nominal growth is a key number in the Budget because it is the base for working out the fiscal deficit ratio and for estimating tax collection.
Fiscal deficit and debt target
On November 6 that Budget 2027, likely to be presented in February, may set the FY28 fiscal deficit target at 4.2 to 4.3 percent of GDP.
The Centre’s main goal is to bring debt down to 50 percent of GDP (give or take 1 percent) by FY31. A ministry official said the pace of fiscal consolidation must be kept up to reach this.
For the current year, the Centre had set the fiscal deficit target at 4.3 percent of GDP. After GDP rebasing, and with the Budget’s assumption of 10 percent nominal growth, the target now works out to 4.5 percent.
What the numbers and experts say
Official data show nominal GDP grew 10.3 percent in the first quarter. SBI Research says growth could rise to 11 to 11.5 percent in the second quarter.
Garima Kapoor, deputy head of research and economist at Elara Securities, expects FY27 nominal growth of 12 to 13 percent. She said oil prices have come down, and could fall more if the war in Asia ends. But she does not think this will change her view much, because earlier price rises are still working their way through the economy. For FY28, she expects nominal growth to fall back to about 10.5 percent.
Sakshi Gupta, principal economist at HDFC Bank, called the ministry’s assumption “realistic, yet slightly conservative.” She said nominal growth estimates depend on the crude oil price assumed. If crude averages $75 to $80 a barrel in FY28, the estimate looks realistic.
