Possible shortfall in nominal GDP growth in FY26 due to benign inflation: CEA Nageswaran

Given the expectation of benign inflation, there may be a shortfall in nominal GDP growth compared to the Budget estimate of 10.1 per cent for the current financial year, Chief Economic Adviser V Anantha Nageswaran said.

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NEW DELHI:

He expressed optimism about meeting the real GDP growth target of 6.3-6.8 per cent for the current fiscal year despite the US imposing a steep 50 per cent tariff on Indian shipments.

Nominal GDP includes changes in prices caused by inflation, reflecting the impact of rising overall price levels, while real GDP is an inflation-adjusted measure that evaluates the value of all goods and services produced in a country during a specific year.

Inflation is expected to be low on account of an estimated good kharif harvest and a reduction in prices of around 400 items after landmark GST reforms were approved recently by the GST Council headed by Finance Minister Nirmala Sitharaman.

"Some shortfall in nominal GDP growth may be there. I think there is a higher chance of that happening. However, what is encouraging to me is that the nominal GDP growth number at 8.8 per cent for the first quarter was better than what many had feared that it would be, somewhere between 8 and 8.3 or 8.5 per cent," he said.