New Delhi [India], January 22 : Supportive fiscal and monetary policies, along with financial deregulation, are expected to aid a revival in the consumer demand in India into FY27, even as the global environment remains uncertain, according to a report by HSBC Asset Management.
The report highlighted that India's macroeconomic framework continues to focus on supporting growth while maintaining stability. It noted that a combination of accommodative fiscal and monetary policies, along with ongoing deregulation in the financial sector, should help sustain domestic demand momentum over the medium term.
This policy support is seen as crucial at a time when external uncertainties continue to pose risks to global growth.
It stated "Supportive fiscal and monetary policies and (financial) deregulation support a domestic/consumer demand revival into FY27".
HSBC said recent reforms, including changes in the Goods and Services Tax (GST) framework and labour reforms, further strengthen India's structural growth story.
These reforms are expected to improve efficiency, enhance formalisation, and support productivity, thereby reinforcing the medium-term outlook for consumption and investment-led growth.
On inflation, the report stated that price pressures are likely to normalise into FY27 while remaining largely benign. However, it also pointed out that inflation is expected to rise in the near term.
As per the report data, inflation in 2026 is projected to increase to 3.9 per cent, compared to 2.1 per cent reported in 2025. Despite this increase, inflation levels are expected to remain within a comfortable range, providing space for policymakers to continue supporting growth.
The report also shared about the importance of fiscal discipline. It said fiscal pragmatism is likely to continue, suggesting that the government will balance growth support with a cautious approach to public finances.
For 2026, the fiscal impulse is expected to remain neutral, indicating no major expansionary or contractionary shift in fiscal policy.
On the growth outlook, HSBC stated that India's economy grew at 7.3 per cent in 2025. For 2026, growth is expected to moderate but remain robust at 6.5 per cent.
The report noted that this growth trajectory reflects resilience in domestic demand, supported by policy measures and structural reforms, even as global growth conditions remain challenging.
In terms of monetary policy, the report said that policy rate expectations remain stable. According to HSBC Asset Management, the 12-months-ahead policy rate outlook for India suggests that rates are expected to remain in the range of 5 to 5.25 per cent.
This stable rate environment is expected to provide predictability for businesses and consumers, supporting borrowing, spending, and investment decisions.
Overall, the HSBC report indicated that India's policy mix, backed by reforms and prudent macroeconomic management, is well positioned to support consumer demand revival into FY27 despite external uncertainties.
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