Stable Global Crude Prices, GST Rate Cuts to Help Contain Inflation in FY27

New Delhi — Average inflation may rise in FY27, but the increase is expected to remain limited due to stable global crude prices, the positive impact of recent GST rate cuts, and subdued price pressures stemming from excess capacity in China, according to a report released on Saturday.

Ratings agency **Care Edge Ratings** said it is maintaining its **7.5% GDP growth forecast for FY26**, noting that the economy’s momentum so far has been supported by income tax cuts, GST rationalisation, and lower interest rates.

Despite global economic uncertainties, Care Edge expects **India’s GDP to grow at 7% in FY27**. The report highlighted that the **Reserve Bank of India’s recent unanimous 25-basis-point repo rate cut to 5.25%** reflects confidence in the current benign inflation trend and aims to further support economic activity.

Additional liquidity measures planned for December reaffirm the RBI's commitment to ensuring smooth policy transmission by maintaining adequate liquidity levels.

### **Inflation Outlook**

The RBI has revised its **FY26 inflation forecast downward to 2%**, from 2.6% earlier — aligning closely with Care Edge’s own estimate of **2.1%**.
Food inflation is expected to remain moderate, supported by:

* Higher Kharif output
* Encouraging Rabi sowing
* Healthy reservoir levels

### **Growth Trends**

India’s economy recorded a stronger-than-expected **8.2% growth in Q2 FY26**, following **7.8% in Q1**. This surge was primarily driven by:

* Strong industrial expansion, led by manufacturing
* Continued momentum in the services sector
* Improved consumption demand boosted by tax cuts and GST rationalisation
* Easing inflation and an early festive season

However, Care Edge expects economic momentum to **moderate in H2 FY26** as the effects of front-loaded exports, festive-season demand, and a low base begin to fade.

—With inputs from IANS