How India's growth rate keeps beating forecasts

Graphs, Data, Perspectives How India's expansion rate keeps beating forecasts RBI has raised its expansion forecast to 7.1% for this financial year.

Key points

• 6 min read New Delhi Oct 10, 2026 07: 38 AM IST First published on: Oct 10, 2026 at 07: 30 AM IST.
• The RBI's median forecast for real GVA was close to the actual real GVA in 2016-17, despite demonetisation.
• Last, the actual data compared here belongs to the 2011-12 series since that is only one for which data is available for past years.
• Up until the Covid year (2020-21), it was the case of the economy doing well and therefore we (forecasters) tended to be over-optimistic.
• It is notable that the administration unveiled demonetisation of 86% of the funds supply in November 2016 – a move that should have dented the economy.

Meanwhile, the RBI's median forecast for real GVA was close to the actual real GVA in 2016-17, despite demonetisation. (Express photo by Partha Paul). Written by: Udit Misra.

In its latest monetary policy review concluded this week, the Reserve Bank of India (RBI) raised its forecast for India's GDP (Gross Domestic Product) expansion rate for the current financial year by 40 basis points to 7.1%. In other words, RBI now expects the size of India's economy to be 7.1% more by the end of March 2027 as compared to the level reached as of March-end 2026.

At one level, this demonstrates the Indian economy's tremendous resilience in the face of growing geopolitical challenges and uncertainties – ranging from US-Iran war and high crude oil costs to deficient monsoon and high temperatures due to the El Niño phenomenon.

But behind this upgrade is a story of yo-yoing forecasts. For instance, at the start of the financial year in April, RBI projected GDP to grow at 6.9%. Then, in the next policy review in June, it rolled it back to 6.6%, before moving it up to 6.7% in August and 7.1% now.

With half the year still left, it is anybody's guess how things may pan out, especially since RBI has now ruled out interest rate cuts and is instead looking to raise them in an attempt to contain inflation.

But the frequent swaying brings into sharp relief the gap between forecasts and India's actual expansion rate.

Meanwhile, the forecasts are significant as they set an initial expectation for all observers. Over the past few years, the actual expansion rate has repeatedly beaten professional forecasts concerning India's economy, and this repeated over-achievement had a role to play in giving a sense that India's actual expansion rate was not credible. The question being: How can the economy beat the forecasts every time?

To understand what has been happening, it is better to look at the forecasts by RBI's panel of professional forecasters. Since September 2007 – that's over the past 20 years – the central bank has been conducting a survey of professional forecasters.

India's GDP expansion beats RBI forecast in June quarter, expands 7.8%.

This survey is done every two months and involves some of the most respected economists tracking the Indian economy for top banks (such as State Bank of India and Citigroup), credit rating agencies (India Ratings & Research, CareEdge Ratings) and research organisations such as the Centre for Monitoring Indian Economy. In the latest survey round, there were 46 such economists who provided the forecast.

To understand if there is any trend, we have looked at the median forecast for real Gross Value Continued (GVA) in RBI's survey done in March each year.

Forecasts vs actual performance. The GVA is a better variable than GDP to look at forecasts. This is since GDP is arrived at by taking the GVA and then adding the taxes earned by the administration and removing the subsidies from it. Since taxes and subsidies are entirely at the government's discretion, it is better to compare GVA forecasts with "actual" GVA to ascertain if there is a pattern. Meanwhile, the median value is the mid-point of all the forecasts.

Last, the actual data compared here belongs to the 2011-12 series since that is only one for which data is available for past years. What the trend demonstrates.

Meanwhile, the table above demonstrates a clear trend. Up until the 2021-22 financial year, the actual GVA expansion rate mostly turned out to be lower than what the professional forecasts suggested at the start of the financial year.

Even if one keeps 2020-21 aside since all forecasts produced in March were rendered useless by the start of April, thanks to the rapid manner in which Covid-induced lockdowns shut down the economy, the gap was quite significant in plenty of years – 2017-18, 2018-19 and 2019-20, for instance. Will the Indian economy's size triple in next 10 years?

But since FY23, more often than not, the actual performance has been better than the forecasts. In fact, the divergence in expansion rates continues to be there even if one looks at the actual data from the new data series with the base year of 2022-23.

Madan Sabnavis, chief economist at Bank of Baroda (one of banks that is part of the RBI panel), has a simple explanation for this trend.

"Up until the Covid year (2020-21), it was the case of the economy doing well and therefore we (forecasters) tended to be over-optimistic. Since 2022, nevertheless, there's been a lot of turmoil starting with the Russia-Ukraine war, the crude oil crisis, then Israel, then the tariffs last year and now the US-Iran war. As such, we tend to be more conservative with our forecast, " he notes.

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Nevertheless, there is one year that still puzzles everyone: 2016-17. On paper, 2016-17 data suggests hardly any change between the forecast created in March 2016 and the actual expansion rate for the year that concluded in March 2017.

But the truth is that the median forecast in March 2017 – the month when the financial year was ending – had fallen from 7.7% (created in March 2016) to 6.7%, and yet the actual GVA grew by 8%. It is notable that the administration unveiled demonetisation of 86% of the funds supply in November 2016 – a move that should have dented the economy.

Notably, the economy may not have been dented in 2016-17, but, seen from this prism, this may explain the progressively underwhelming performance in the next three years – FY18, FY19 and FY20 – even before Covid-19 hit the economy. © The Indian Express Pvt Ltd. Udit Misra is Senior Associate Editor at The Indian Express. Misra.

Taken together, the developments around how India' s growth rate keeps beating forecasts point to a situation that is still moving, and the coming days should bring more clarity.