Crisil Intelligence in its latest report has said that real gross domestic product (GDP) growth of India is likely to moderate but remain healthy at 7.1% in fiscal year 2026-27 (FY27) compared with 7.6% in FY26 (revised under the new GDP series). It noted that conflict in West Asia, if prolonged, could pose a downside risk to India's economic outlook due to its impact on crude oil and commodity prices.

It highlights India’s resilience in withstanding shocks while sustaining growth, as strong domestic demand, ongoing public infrastructure spending, and a gradually expanding private sector capex cycle help offset an uncertain external environment marked by rising protectionism and geopolitical tensions. It also expects export growth to maintain momentum, supported by lower US tariffs relative to FY26, steady global growth and robust services exports even as frontloading benefits fade.

It further said the retail inflation is likely to rise to 4.3 per cent on average in FY27 from an estimated 2.5 per cent in FY26. As food prices are expected to remain benign, assuming a normal monsoon in 2026, inflation should normalise from its current lows. It said the reduced weight of food in the new CPI 2024 series should contain the upside to headline from normalising food inflation.

It also said headline retail inflation is likely to remain close to the central value of the RBI's tolerance band. This would allow the central bank to hold the repo rate and focus on transmitting the 125 bps rate cut implemented in calendar year 2025. It expects that policy rates will remain steady in FY27; the cumulative rate cut of 125 bps undertaken in calendar year 2025 will continue to be transmitted to bank lending and deposit rates.