Arvind Virmani retains India's GDP growth forecast at 7%

NITI Aayog Member Arvind Virmani has retained his forecast of 7% GDP growth for India this year, while maintaining a wide uncertainty range amid unresolved trade issues and evolving global developments.

“My forecast right now for the whole year is still the same. 7% plus or minus 1%,” Virmani told ANI on the sidelines of the Kautilya Economic Conclave.

Virmani said he had earlier raised his growth forecast from 6.5% to 7% but had simultaneously widened the uncertainty range, stressing that uncertainty is an inherent feature of macroeconomic conditions.

“Uncertainty is a fact of macroeconomic life,” he said, noting that economic forecasts can be affected by developments that were not anticipated when projections were made.

He said he had reassessed his forecast about a month ago in light of unresolved trade issues and other global factors, but decided to retain the 7% projection.

Virmani said he would not revise his full-year estimate solely on the basis of quarterly GDP data, despite India recording 7.8% growth in the first quarter of FY27.

“A lot of people saw this 7.8 and suddenly started raising their forecasts. But I don't do that. I have a forecast, I have a range of uncertainty,” he said.

His comments come as economists and analysts reassess India's growth outlook following the stronger-than-expected first-quarter expansion, while external factors including trade developments remain a source of uncertainty.

On the Merchant Discount Rate (MDR) for UPI transactions, Virmani said the initial subsidy had played an important role in expanding UPI and creating what he described as a new public good, but argued that the system should gradually move towards a cost-based model.

“A good subsidy creates a new public good at minimum cost,” he said.

Virmani said retaining support for transactions below a specified threshold while withdrawing it above that level represented a transition away from subsidies.

He also said a move towards a cost-based system could address concerns raised by competing international payment companies over whether UPI receives subsidised treatment.

Asked whether MDR could affect UPI transaction volumes, Virmani said transactions would continue to grow, although there could be a temporary impact if additional costs were passed on to users or businesses.

“Eventually you have to pass the thing through into the system,” he said, adding that economists generally preferred direct transfers over product-based subsidies.