India's Nominal GDP growth expected at 9.8-10.3 pc in FY26: Bank of Baroda

After the Economic Survey projected India's real GDP growth for FY26 in the range of 6.3-6.8 per cent, a report by Bank of Baroda stated that with an assumed GDP deflator of 3.5 per cent, the country's nominal GDP growth could be around 9.8-10.3 per cent.

The GDP deflator is an important measure used to convert nominal GDP (which includes inflation) into real GDP (which is adjusted for inflation). It reflects the overall price level changes in the economy and helps assess the actual economic growth.

The report said "We assume GDP deflator of around 3.5 per cent, which would translate nominal GDP growth to 9.8-10.3 per cent in FY26".


The report's estimate also suggested that while India's economy is expected to grow at a steady pace in real terms, inflation will still play a role in determining the overall expansion of the economy in nominal terms.

The Economic Survey, released ahead of the Union Budget, provides key insights into the economy's performance and lays the groundwork for fiscal policies.

The Survey's real GDP forecast for FY26 is considered slightly conservative, aligning closely with the National Statistical Office's (NSO) estimate of 6.4 per cent. This nominal GDP projection is critical for fiscal planning, as deviations in economic growth directly impact key deficit ratios, influencing government spending and revenue collection.

One of the major themes highlighted in the Economic Survey is the focus on achieving sustainable growth. The report suggested that reducing business costs through deregulation, enhancing domestic capacities, and promoting energy transition will be crucial drivers of long-term economic expansion.

The Survey also analyzed global inflation trends, noting that 2024 has been a period of low inflation worldwide, aided by synchronized monetary policy tightening and favorable commodity prices. However, India has faced inflationary pressure, mainly due to volatile food prices. The contribution of food items to inflation stood at 32.3 per cent in FYTD25.


The Survey acknowledged that government interventions and monetary policy measures by the Reserve Bank of India (RBI) have helped contain inflationary pressures to some extent.

To tackle food inflation, the government has taken several supply-side measures. These include stock limits on wheat and tur, open market sales of cereals, duty-free imports of certain pulses, buffer stock building, and subsidized sales of onions. These steps have been instrumental in stabilizing food prices and preventing further price spikes.

With these economic measures in place, policymakers will closely monitor inflation and growth trends while preparing the Union Budget. The focus will likely remain on sustaining growth momentum, managing inflation risks, and ensuring fiscal stability in the coming years.