The growth-inflation mix is set to worsen for India this fiscal year, largely due to the West Asia conflict and expectations of a sub-par monsoon — factors not in our control. The longer the conflict persists, the greater the risk to growth and upside to inflation.

To be sure, GDP growth was unscathed in 2025-2026, according to the latest estimates of the National Statistical Office (NSO), despite the tariff turbulence of 2025 and the conflict, which began towards the end of February this year.

The NSO now sees GDP growth for the year at 7.7 per cent, slightly higher than the second advance estimate of 7.6 per cent released in February. The print is above the potential growth rate of 7 per cent noted in the recent Economic Survey and much stronger than projected by policymakers and analysts at the beginning of the year.

The revision is not unusual, considering the February estimate was based on incomplete information for the fourth quarter. High-frequency indicators such as auto sales and retail credit growth indicate domestic demand held up during the quarter. But what really makes the performance stand out is a combination of sustained high growth — measured through rebased GDP — and benign inflation, at a lower-than-expected 2.1 per cent.

Several factors helped sustain growth despite adverse external conditions. The impact of high tariffs imposed by the US was lower than initially feared as exporters front-loaded shipments. Services exports remained robust, while exemptions for fast-growing sectors such as electronics helped limit the damage. Low crude oil prices and a normal monsoon — the “good luck” factor for India — supported growth and kept inflation under control.

Policy interventions contributed, too. Rate cuts by the RBI’s........

© Indian Express