Mumbai, March 11 The ongoing conflict in West Asia could pose a downside risk to India's economic outlook due to its impact on crude oil and commodity prices, according to a report by Crisil Intelligence.
In its base case scenario, the report expects India's real GDP growth to moderate to 7.1 per cent in FY27, which is still healthy and slightly above potential.
The growth will be supported by robust private consumption and a mild pick-up in private investment.
Private investment sentiment is improving with a recovery in private capital expenditure underway, driven by emerging sectors, according to the report.
It also expects export growth to maintain momentum, supported by lower US tariffs relative to FY26, steady global growth, and robust services exports, even as the benefits of frontloading diminish.
Retail inflation is likely to rise to an average of 4.3 per cent in FY27, compared to an estimated 2.5 per cent in FY26. Given that food prices are expected to remain benign, assuming a normal monsoon in 2026, inflation should normalize from its current low levels.
"The reduced weight of food in the new CPI 2024 series should contain any upside pressure from normalizing food inflation," the report added.
Headline retail inflation is likely to remain close to the central value of the RBI's tolerance band. This would allow the central bank to hold the repo rate and focus on transmitting the 125 bps rate cut implemented in the calendar year 2025, Crisil said.
The report expects that policy rates will remain steady in FY27; the cumulative rate cut of 125 bps undertaken in the calendar year 2025 will continue to be transmitted to bank lending and deposit rates.
"We also expect the RBI to remain proactive on liquidity management. We expect financial conditions to remain resilient in fiscal 2027 amid a supportive monetary policy and strong macro fundamentals,"