The Union Budget for financial year 2027-28 is likely to peg nominal GDP growth at 10.5 to 11 percent, according to a senior government official cited by Moneycontrol. The estimate is expected to reflect prevailing inflation trends and the country's economic growth outlook.

For the current financial year FY27, nominal GDP growth is expected to reach 11 to 11.5 percent, compared with the 10 percent assumption initially made in the Union Budget. Meanwhile, Finance Ministry officials expect real GDP growth in FY28 to remain within the range of 6.5 to 7 percent.

Nominal GDP represents the total market value of goods and services produced within an economy at prevailing prices and includes the impact of inflation. Unlike real GDP, it is not adjusted for changes in price levels. The government's nominal GDP assumption is particularly important for budget calculations because it determines the base for estimating tax revenues and calculating the fiscal deficit as a percentage of GDP.

The government is also expected to maintain its fiscal consolidation roadmap in the upcoming Budget. According to earlier Moneycontrol reports, the FY28 fiscal deficit target could be set at 4.2 to 4.3 percent of GDP. The Centre's broader objective is to bring the debt-to-GDP ratio down to 50 percent, with a tolerance band of one percentage point, by FY31.

For FY27, the government initially budgeted a fiscal deficit of 4.3 percent of GDP. However, following GDP rebasing and changes in the nominal GDP assumptions, the estimated fiscal deficit ratio has increased to approximately 4.5 percent.

Recent economic data indicates that nominal growth remains relatively strong. India's nominal GDP expanded 10.3 percent in the first quarter of FY27, according to Ministry of Statistics data. SBI Research expects nominal GDP growth to accelerate to 11 to 11.5 percent in the second quarter.

Economists also expect nominal GDP growth to remain elevated during FY27. Garima Kapoor, Deputy Head of Research and Economist at Elara Securities, estimates FY27 nominal GDP growth at 12 to 13 percent, partly reflecting the delayed pass-through of earlier price increases. However, she expects growth to moderate to around 10.5 percent in FY28 as inflationary pressures normalise.

Sakshi Gupta, Principal Economist at HDFC Bank, described the government's expected FY28 nominal GDP assumption as realistic, although slightly conservative. She indicated that an average crude oil price of $75 to $80 per barrel during FY28 would support the government's projected nominal growth estimate.

The government's FY28 growth assumptions will therefore play an important role in determining its revenue projections, borrowing requirements and fiscal consolidation strategy. A balance between maintaining economic growth, managing expenditure and reducing public debt is expected to remain a key priority in Budget 2027.