Pranjul Bhandari, Chief India Economist at HSBC, said she expects the Reserve Bank of India (RBI) to act later this year. “I think that RBI will continue to cut at this point, given the growth drag that comes from the 50% tariff. But it may not happen as soon as October… I myself have it pencilled in for December,” she said.
On GDP, Bhandari noted that the official growth figure of 7.8% may be overstated due to the deflator. “Our sense is that, real GDP growth number is closer to 6.8% and not 7.8% that was announced,” she said, while pointing out that consumption and rural demand had supported growth ahead of tariff implementation.
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Sameer Narang, Head of Economics Research Group at ICICI Bank, took a different stance, saying RBI is unlikely to cut rates this financial year. “We believe a bumper Diwali ahead… that would ensure that RBI holds back on the growth run, because the domestic economy should be doing well,” he said. Narang expects inflation to average around 4.7% this year, with some downside from GST changes.
Both economists agreed that growth will moderate as the boost from government capex fades. Narang estimated that front-loaded spending of around ₹3.8 lakh crore gave nearly a two-percentage point lift to growth in the June quarter, but warned that “in the subsequent quarters, you’re likely to see much lower government capex.”
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Bhandari cautioned that growth on the ground could be weaker than official numbers suggest. “Growth on the ground for the FY26 fiscal year will be about 6.3% but the official numbers, because of the deflator problems, could be closer to 7%,” she said. She also flagged risks from weaker exports, uncertain capital inflows, and pressure on the rupee.
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