MC EXCLUSIVE India’s 'Goldilocks' run to continue for next two years; FY27 growth likely at 6.5-7%: EAC-PM Chair

S Mahendra Dev, Chairman, EAC-PM

• India's FY26 economy to grow 7.4%, fueled by consumption and capital expenditure.
• FDI and FPI inflows may rise in 2026, supporting rupee appreciation
• Exports diversification and FTAs add resilience amid global uncertainty

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The year 2026 is likely to continue the momentum seen in economic growth in 2025, as the impact of US' tariffs on India’s economy has been much lower than what was anticipated earlier, S Mahendra Dev, Chairman, Economic Advisory Council to the Prime Minister told Moneycontrol.

"High domestic consumption, and continued thrust on public capital expenditure is likely to keep growth around 6.5-7 percent in the next fiscal year (FY27)," Mahendra Dev said, adding that 2026 could also see more FDI and FPI inflows, which should prompt the rupee to appreciate.

In FY26, India’s economy is likely to grow 7.4 percent, as per statistics ministry’s first advance estimate released today.

The Chairman, EAC-PM, also expects the "goldilocks phase" in the Indian economy – a period of high growth and low inflation – to continue for the next two years. "Next financial year, CPI inflation could be about 4 percent, which is not too high given low base, even as growth remains stable."

In 2025, the rupee emerged as Asia’s worst-performing currency against the dollar, weakening roughly 5–6 percent. In mid-December, it touched a record low of Rs 91.08 a dollar.

"India has entered into FTAs with various trade partners which is contributing to diversification of exports. This adds to the overall resilience of exports," the Chairman said. On FDI, he says that investments by global corporates may continue in the upcoming fiscal, especially in technology and banking sector, in the wake of favourable policies by the Central government.

On private sector capex, Mahendra Dev sees some signs of revival. “As per reports, corporate investment announcements between April and September have increased to a decade high of Rs 15.1 lakh crore. This is reflected in announcements like Google setting up AI data centres in Andhra Pradesh with an announced investment of USD 15 billion.”

On exports, the Chairman said that "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. Going forward, the growth in exports will only rise, and add to GDP." India’s merchandise exports in April-November FY26 rose merely 2.6 percent year-on-year to $292.1 billion.