Budget Watch: Economists See Nominal GDP Near Double Digits Next Year

With India’s first advance estimates pointing to weaker-than-expected nominal GDP growth, attention now turns to the assumptions the government may make in the forthcoming Union Budget. In this conversation, Saugata Bhattacharya, Senior Fellow at CPR and Member of the Monetary Policy Committee, outlines why policymakers are likely to rely on a broad set of inflation forecasts from the RBI, government think tanks and the Chief Economic Adviser’s office. He suggests that with CPI inflation expected to hover around 3.5–4% and WPI inflation around 2.5–3%, nominal GDP growth assumptions for the next fiscal year could settle in the 9.5–10.5% range. Siddhartha Sanyal, Chief Economist, Bandhan Bank, adds that a partial normalisation of the gap between real and nominal GDP is likely, making a near double-digit nominal growth estimate a realistic working assumption for the upcoming Budget.