Growth With Caution
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Executive Summary
GDP grew by 8.2% in Q2 (8% in H1), the fastest in 6 quarters, driven by manufacturing, consumer spending and GST cuts
IMA has raised its FY26 growth forecast to 7-7.3%.
Agri remains strong, manufacturing has surged but services truly powers growth
Inflation dropped to a record low of 0.25% in October, prompting the RBI to cut the Repo rate by 25 bps and lower its FY26 inflation targets.
The external sector is a mixed bag: services exports are strong but merchandise has slowed; imports are up sharply, as is the trade deficit; the rupee is down, weighed by FPI outflows and concerns over trade
NDA won by a landslide in Bihar strengthening the BJP’s hand at the Centre
Caste census and delimitation will be issues in the coming months
The Centre pushed through 4 Labour Codes despite union resistance
Key legislation being considered in Parliament includes amendments to India’s nuclear liability laws
Trade talks are progressing with the EU but likely to go down to the wire with the US
A short India visit by Vladimir Putin has reenergised Indo-Russian ties and tilted the focus of foreign policy away from the West
India continues to face complex regional dynamics, particularly involving Bangladesh, Nepal and China