New Delhi- India’s economy is projected to grow by around 7 per cent in the current fiscal year (FY26), driven by resilient household consumption and easing inflationary pressures, according to a report released by Crisil on Monday.
The report noted that monetary policy easing by the Reserve Bank of India (RBI), along with targeted liquidity measures, is expected to keep financial conditions supportive. While the contribution of lower inflation and government capital expenditure may moderate in the second half of FY26, consumption is likely to remain robust due to the lagged impact of RBI rate cuts and recent tax relief measures.
“Along with softer policy rates, financial conditions will continue to benefit from the RBI’s liquidity-easing measures through the remainder of the fiscal,” the report stated.
Crisil highlighted that the RBI’s open market purchases of government securities and the $5 billion USD/INR buy-sell swap scheduled for mid-December should help maintain comfortable liquidity conditions.
However, the report cautioned that global uncertainties and their potential impact on foreign portfolio investors (FPIs) and the rupee could lead to periods of volatility. Financial markets showed mixed trends in November, with FPIs remaining net buyers, although inflows slowed to $0.3 billion from $4 billion in October.
Financial conditions tightened during the month due to reduced FPI inflows and weakness in the rupee. Equity markets recorded net outflows of $0.4 billion in November, compared to inflows of $1.7 billion in October, while debt inflows declined sharply amid rising US Treasury yields.
Despite these pressures, a higher liquidity surplus, softer money market rates, and gains in equity markets helped limit the decline in the Crisil Financial Conditions Index (FCI).
The report further projected that retail inflation would average around 2.5 per cent in FY26, a significant drop from 4.6 per cent last year. This moderation is expected to be supported by lower crude oil prices and GST-related relief, keeping headline inflation within the RBI’s tolerance band.
With inputs from IANS