India’s GDP is projected to grow at 6.2 per cent in FY26, with CPI inflation around an average 4.0 per cent
MUMBAI — India’s GDP is projected to grow at 6.2 per cent in FY26, with CPI inflation around an average 4.0 per cent, a report showed on Friday, adding that it does not expect any further rate cuts from the RBI “unless downside risks to growth materialise”.
The Current Account Deficit or CAD (as per cent of GDP) is projected at 1.0 per cent in FY25 and 0.9 per cent in FY26, while the fiscal deficit is estimated at 4.4 per cent, according to a CareEdge Ratings report.
“The 10-year G-Sec yield is expected to range between 6.0 per cent–6.2 per cent by the end of FY26, and the USD-INR exchange rate is projected to trade between 85 and 87 by the end of FY26,” the report mentioned.
In the recent MPC, RBI signalled prioritising growth amid easing inflation concerns. In a significant liquidity measure, the RBI also announced a phased 100 bps CRR cut starting September, which is expected to inject approximately Rs 2.5 lakh crore of durable liquidity into the system by December 2025.
For FY26, the RBI retained its GDP growth forecast at 6.5 per cent, while lowering the CPI inflation projection to 3.7 per cent from 4.0 per cent.
Meanwhile, crude oil prices surged sharply in June amid heightened Middle East tensions, touching around $79 per barrel — the highest since January 2025 — before easing by 14 per cent as tensions subsided.
CareEdge Ratings expects Brent to average $65–70 per barrel in FY26, assuming no further escalation in tensions. These levels do not warrant changes to their FY26 forecasts for India’s growth, inflation, fiscal deficit, CAD or the rupee.
“Nonetheless, the conflict in the Middle East remains a key monitorable, especially as the Strait of Hormuz accounts for over a quarter of global seaborne oil trade,” said the report.
India’s diversified crude oil import basket also provides some buffer. Based on quantity imported, Iran’s share in India’s POL (petroleum, oil and lubricants) imports fell to just 0.1 per cent in FY25 (from 5.2 per cent in FY15).
While the Middle East remains a major supplier, its share has declined to 50 per cent from 60 per cent over the past decade. In contrast, imports from other countries like Russia surged to 28.5 per cent in FY25 from just 0.2 per cent in FY15.