Kaushik Das, Chief Economist at Deutsche Bank, said inflation could fall close to zero this month, adding, “There’s an outside chance that you can get an even negative year-on-year number if food prices remain weak in October.” He expects full-year inflation to stay near 2%, well below the RBI’s target. “They should not delay it any further,” Das said. “They should do a 25 basis points rate cut.”
Das noted that with inflation averaging around 4% next year, the policy rate of 5.25% would still provide “about 125 basis points of positive real rates.” He added that nominal GDP growth, not just real GDP, should be closely watched since it affects tax revenue, credit growth, and earnings.
Also Read | Retail inflation eases to 1.54% in September, lowest since June 2017 on softer food prices
Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, said she sees scope for up to 50 basis points of rate cut. As inflation could remain below 3% this year and even near 4% through FY27, it leaves the RBI with adequate room to address growth. Festive spending and GST-related demand might temporarily lift consumption data.
Samiran Chakraborty, Chief Economist at Citi India, said India’s GDP growth could reach 7% this year, supported by stimulus measures and low inflation. “How consumers respond to the stimulus and how the global situation unfolds will determine how the second half is going to look like,” he said.
He also commented on the rupee’s recent movement. “After the governor’s statement in October, the intensity of intervention might have gone up,” Chakraborty said, adding that the RBI may be using its foreign exchange reserves to stabilise the currency.
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Madhavi Arora, Chief Economist at Emkay Global Financial Services, said the economy faces a “tug of war” between global headwinds and domestic demand. She pointed out that income weakness in urban areas could “spill over to the semi-urban economy” and that some of the current consumption boost “could be a temporary pop-up.”
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