India loses momentum: economists expect 7.1% growth as costly oil weighs
Growth is set to slow after a strong start to the fiscal year, a Reuters poll shows. Inflation stays above target, and two more rate hikes are expected.
Symbolic image · Photo: Sohel Patel / Wikimedia Commons, CC0 (cropped and resized)
India's economy is likely to lose momentum after a strong start to the fiscal year, according to a Reuters poll of economists conducted Oct. 19-26 and published on Wednesday. The median forecast for growth in fiscal 2026-27, which ends in March 2027, is 7.1%, down from 7.7% the previous year. For 2027-28, economists expect 7.0%.
The biggest drag is oil: futures are near $116 a barrel, about 60% above pre-war levels. Inflation is expected to average 6.1% this quarter and to stay above the central bank's 4% medium-term target at least until the end of 2027. The Reserve Bank of India has already raised rates once; respondents expect two more increases, to 6.0%, by the end of March.
Kunal Kundu of Societe Generale warned of the risk that price pressures become "embedded". Indranil Pan, chief economist at Yes Bank, said the scale of government cash support "immediately tells me all is not well". According to the poll, private investment grew nearly 12% in the June quarter, and economists have underestimated India's growth in 10 of the past 12 quarters.