Growth Slows After Strong 2025, But Outlook Remains Resilient
After a strong 2025, Bharat’s economic growth is expected to moderate during FY26–27, partly due to global headwinds including higher US tariffs. Despite this slowdown, Bharat continues to stand out as a global bright spot, with GDP growth projected in the 6.8–7% range.
Inflation is expected to bottom out and gradually rise toward the 4% target, creating room for the Reserve Bank of India to deliver a final 25 basis point repo rate cut to 5% in February. This shift reflects confidence that price stability is returning without undermining growth.
RBI Policy Cushions Tariff Impact
Even if global trade frictions persist, the RBI is expected to maintain an accommodative policy stance through 2026, ensuring adequate liquidity to support credit growth, corporate hiring, and investment sentiment.
Economists at Nomura project inflation normalising around 4% in FY27, creating balanced conditions for higher nominal growth and improved revenue visibility for businesses.
From ‘Goldilocks’ to Sustainable Normalisation
In 2025, Bharat experienced a rare “Goldilocks” phase—high growth paired with near 2% inflation, as described by RBI Governor Shaktikanta Das. While inflation is expected to normalise, analysts see this transition as healthy rather than disruptive.
Bank of America forecasts growth of 7.6% in FY26, easing to 6.8% in FY27. Although delayed trade policy adjustments remain a risk, strong domestic demand, improving credit transmission, and policy continuity are expected to anchor stability.
