New Delhi, Dec 15 India’s economy is on track to expand about 7 per cent this fiscal (FY26), supported by healthy household consumption, lower inflation, a report showed on Monday.
The report from Crisil said that the policy easing by the Reserve Bank of India and targeted liquidity measures are expected to keep financial conditions comfortable.
"Support from lower inflation and government capex will also decrease in the second half of FY26. However, consumption is expected to remain healthy due to the lagged impact of the RBI’s rate cuts and tax relief," the report said.
"Besides soft policy rates, financial conditions will get support from the RBI’s liquidity easing measures for the rest of this fiscal," it added.
The open market purchases of government securities and the $5 billion USD/INR buy/sell swap announced by the central bank for mid-December should keep liquidity conditions comfortable, the firm forecasted.
However, global uncertainty and its impact on foreign portfolio investors (FPI) and the rupee may lead to some volatility, it added.
Markets showed mixed signals in November as FPIs remained net buyers, though the quantum of inflows moderated to $0.3 billion from $4 billion in October. Two factors tightened financial conditions in November: a reduction in net FPI inflows and weakness in the rupee, the report said.
The equity market also saw net outflows of $0.4 billion compared with an inflow of $1.7 billion in October, while debt inflows slowed sharply amid rising US Treasury yields.
A higher liquidity surplus and resultant softening in money market rates, and gains in equity markets, capped the decline in the Crisil Financial Conditions Index (FCI).
The firm forecasts that retail inflation will average about 2.5 per cent this fiscal, down from 4.6 per cent last year, supported by low crude oil prices and GST relief that should keep headline inflation within the RBI’s tolerance band.
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