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Below the Perspective on the Advance GDP Estimates by Ms. Rajani Sinha, Chief Economist, CareEdge Ratings

“The advance estimate of GDP growth of 7.4% for FY26 is very much in line with our expectations. With favourable factors like GST rationalisation, lower income tax burden, low inflation, cut in interest rates and strong rural demand, the growth momentum was expected to be healthy. However, we need to be wary of the heightened global uncertainties and trade barriers imposed by the US and the impact of that on our exports and capital flows.

 Even with nominal GDP growth estimated at a low of 8% in FY26, we feel the government will manage to broadly meet the fiscal deficit to GDP target of 4.4%. While the tax revenue growth has been weak, there is support from higher dividend transfer by RBI to the government. Moreover, in the fiscal year so far, the government has gone slow on revenue expenditure, even while strongly pushing the capital expenditure.

 With GDP growth remaining healthy, we feel that the MPC is unlikely to cut rate further in the next meeting. Given the turbulent global landscape, we expect the MPC to pause and preserve the policy space for a future rate cut only if the growth outlook deteriorates.”.

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