The gross domestic product (GDP) growth in India is expected to inch up to 6.7 per cent next fiscal FY26, a Crisil Intelligence report said on Monday, citing that sustained falling of food inflation, coupled with softening non-food inflation should create room for a rate cut in the coming months.
Headline inflation continued making progress towards the central bank's target of 4 per cent inflation as food inflation eased for the second consecutive month and non-food inflation stabilised.
Consumer Price Index inflation softened to 5.2 percent from 5.5 percent in November, and food inflation softened to 8.4 percent from 9 percent, while non-food inflation remained steady at 3.1 percent.
"Net-net for this fiscal, we expect CPI inflation to average 4.6 percent with some upside bias to the forecast," said the Crisil report.
The Index of Industrial Production (IIP) came in at 5.2 per cent for November, revised up from October's 3.5 percent to 3.7 per cent.
Main drivers for growth were investment goods and consumer durables outpacing expectations, although an easy base comparison also supported November's numbers. The National Statistical Office's first advance estimates put GDP growth moderation to 6.4 percent compared with last fiscal's 8.2 percent.
"Moving forward, we forecast GDP growth to pick up at 6.7 percent in the next fiscal in our base case. Support to growth should come from RBI rate cuts, softer crude oil prices, and a normal monsoon, the report stated.
Rising agricultural growth can be seen, as high reservoir levels will also boost the rabi output. That could give an edge to farm incomes and consumption in the countryside.
Higher agriculture production is likely to ease the pressure on food inflation in the rest of this fiscal, thereby boosting discretionary consumption.
Read also| PE Investment in India’s Real Estate Reaches $2.82 Billion in April-Dec FY25
Read also| Top Industry Associations Criticize Zomato and Swiggy Over Private Label Food Delivery
