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India Economic Pulse
India Economic Pulse - economic indicators and policy measures decodes high frequency economic indicators and the direction of government thinking, to make them more relevant for businesses.
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We are pleased to share the March 2026 edition of the EY India Economic Pulse which assesses the implications of the conflict in the Middle East on India’s macroeconomic outlook, external sector, public finances, and demand conditions.
Key highlights from this edition include:
- Growth outlook: The OECD has revised India’s GDP growth forecast to 7.6% for FY26 and 6.1% for FY27, reflecting higher energy prices, supply chain disruptions, and softer global demand while RBI has projected growth at 6.9% with downward risks.
- Inflation risks: Inflation is expected to rise toward 4.6% (RBI) for FY27, driven primarily by sharp increases in crude oil and natural gas prices.
- External sector pressures: Elevated crude prices have widened the merchandise trade deficit and may lead to a further expansion in the current account deficit.
- Currency and capital flows: The rupee has depreciated over the past year, contributing to net FPI outflows of around US$12 billion in March 2026.
- Fiscal and interest rates: Rising fuel subsidies and higher government bond yields increase pressure on public finances and borrowing costs.
- Demand trends: High‑frequency indicators for March 2026 show resilient demand, led by strong vehicle registrations, though business sentiment signals growing caution.
Going forward, the economic impact will depend on the durability of the ceasefire and the pace at which global energy markets normalize. Continued policy agility by the Government and the RBI will be key to managing near‑term risks while sustaining India’s growth momentum.
Please find below the complete report for a deeper analysis.
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