Murray started the match quickly, breaking Raonic in his first two service games to take the first set. He survived a fight-back from Raonic in the second set, before wrapping up the match in the tie-break.
"It was good to finish the year with a win. It was a good match to work on returns as Milos has a strong serve," said Murray, who has just been knighted in the New Year Honours list.
"I still feel like Andy Murray -- that feels more normal. But I am happy with the knighthood, and it is a nice way to start the new year."
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Murray ended 2016 at the top of the men's rankings for the first time having won titles including Wimbledon, where he beat Raonic in the final, and the Rio Olympics and ATP World Tour Finals.
He will be looking to defend his world number one ranking at the Australian Open starting in mid-January. Murray has been the runner-up in the men's singles competition in Australia five times but has yet to win it.
(Reporting by Shravanth Vijayakumar in Bengaluru; Editing by Hugh Lawson)
