According to the Reuters poll, the Indian economy will grow slightly faster than expected, with a surprise 7.8% expansion seen in the April to June quarter, raising their forecast for a second straight month.
That boost and GST cut around the festive season have led most economists in the October 15-24 survey to revise up or keep their full-year forecasts unchanged.
Although the U.S. still maintains a punitive 50% tariff on Indian goods, recent remarks from Washington and New Delhi have generated optimism that it will be lowered.
The median forecast for more than 40 economies predicts GST to average 6.7% in this fiscal year.
This is a bit higher than the 6.6% estimate from last month’s Reuters poll and a significant increase from the 6.3% projected in August, before the release of stronger-than-expected growth figures for April-June.
A solid 68% of economists, 34 out of 50, expect the RBI to cut interest rates by 25 bps in December after holding the repo rate at 5.50% earlier this month. In September, a slight majority forecast no change.
The central bank signalled in October that cooling inflation allowed supportive policy measures. The poll shows inflation at 2.5% this fiscal year, rising to 4.2% next year.
Rates are likely to remain on hold until at least the first half of 2027, following December’s expected cut. Sakshi Gupta from HDFC Bank noted that policy support and the performance of the rural economy led to a slight revision in GDP growth.
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Recent tax cuts may help households, but doubts remain about whether they will boost private investment, which is vital for jobs. Uncertainty, partly due to U.S. policy shifts, hampers investment.
