Deloitte India on Sunday projected India’s economic system to develop 6.5%-6.8% within the present fiscal yr, with progress anticipated to strengthen within the second half on the again of festive demand, financial easing and a gradual stabilisation in international circumstances.
India entered 2026 in a “Goldilocks” part, with macroeconomic fundamentals showing nicely balanced, in accordance with Deloitte India’s newest Economic Outlook report.
However, the report mentioned geopolitical tensions within the Middle East have since altered the worldwide panorama by disrupting key transport routes, fuelling commodity worth volatility and weighing on investor sentiment.
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The developments resulted in a wider commerce deficit, sustained capital outflows and a pointy depreciation of the rupee towards the US dollar inside a matter of weeks.
Against this backdrop, the Reserve Bank of India (RBI) final month lowered its GDP progress forecast for the present fiscal to six.6% from 6.9%. India’s economic system expanded 7.7% in FY2025-26, in accordance with PTI.
Deloitte India Economist Rumki Majumdar mentioned the worldwide atmosphere has develop into significantly extra unsure.
“While recent geopolitical developments and the RBI’s policy measures may help cushion some of these risks, weather-related uncertainties, particularly the impact of El Nino on agricultural output and food prices, remain an important downside risk,” Majumdar mentioned.
She added that progress is prone to stay average within the first half of the fiscal earlier than strengthening within the second half, supported by festive demand, financial easing and a gradual stabilisation in international circumstances.
Despite the near-term challenges, Deloitte remained optimistic about India’s medium-term progress outlook.
The report mentioned India’s accelerated push to signal Free Trade Agreements (FTAs) with massive and strategically vital markets is among the many key components supporting its long-term progress prospects.
“As FTAs deepen, India’s priority must be to convert market access into lasting competitiveness. Greater import resilience should not translate into permanent import dependence. Trade policy must therefore be complemented by industrial policy, world-class infrastructure, stronger domestic supplier ecosystems, easier compliance, and continued investment in innovation and skills to raise domestic value addition over time,” Majumdar mentioned.
Inflation stays one of many greatest dangers to India’s progress outlook, Deloitte mentioned. The report famous that greater costs of crude oil, fertilisers, important minerals and edible oils, coupled with a weaker rupee, are step by step feeding into home costs.
India’s retail inflation, primarily based on the Consumer Price Index (CPI), rose to an 18-month excessive of 4.38% in June, pushed by greater meals and gasoline costs.
The report additionally warned {that a} weak monsoon might intensify inflationary pressures within the coming months by pushing up meals costs.
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Since meals accounts for practically 46% of India’s CPI basket, sustained meals inflation might spill over into broader worth pressures by influencing family inflation expectations and wage calls for.
“Policymakers therefore face a delicate balancing act. They must contain inflation without relying excessively on subsidies, which would create difficult trade-offs between macroeconomic stability and fiscal discipline,” Majumdar concluded.
(With PTI Inputs.)
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