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Informist, Tuesday, Jun. 23, 2026

 

NEW DELHI - ANZ Banking Group has raised its forecast for India's GDP growth for the current financial year, citing strong underlying momentum and fading of risks with a fall in crude oil prices. With growth seen resilient, and inflation projected to rise this year, ANZ expects two interest rate hikes in August and October, though these could be delayed, the bank's economist Dhiraj Nim said in a report.

 

"Lower Brent crude prices and the possible reopening of the Strait of Hormuz support a more positive view of India's economic outlook," Nim said. "Still, any reassessment is likely to remain cautious until a final US-Iran peace agreement is reached, and oil supply fully normalises."

 

The Australian bank expects India's GDP to grow 6.7% in FY27, 30 bps higher than the 6.4% growth projected previously. ANZ's growth forecast for FY27 is a tad higher than the Reserve Bank of India's projection. The Indian central bank lowered its GDP growth projection for FY27 earlier this month by 30 bps to 6.6%.

 

India's GDP grew 7.8% in the March quarter and 7.7% in FY26. For FY28, ANZ forecasts GDP growth to rise to 6.9%. 

 

"The energy price shock – now likely past its worst – had been a key risk to FY27 private investment through margin pressure and demand uncertainty. As prospects for a resolution to the US-Iran conflict improve, these headwinds should ease, lending support to sentiment amid firm domestic demand," Nim noted. 

 

INFLATION, INTEREST RATES

CPI inflation is rising broadly as expected, led by fuel price hikes and increasing food inflation, ANZ said. Price pressures are also spreading across core inflation categories, pointing to early second-round effects from the energy shock, Nim said, adding that household inflation expectations are also on the rise.

 

ANZ expects inflation to reach 6% by end-2026, before easing, "though it is likely to stay above 5% for an extended period". For FY27, ANZ retained its CPI inflation forecast of 5%, given uncertainty around rains and food prices.

 

"India's shifting macro backdrop raises the case for moderate rate hikes, in our view," Nim said. "With inflation likely to rise and remain above 5% for some time, an unchanged policy rate would push the real policy rate – and real returns for domestic savers – below 1%, which may be too low."

 

ANZ expects two 25-bps interest rate hikes in August and October, though "delays are possible and data dependent". The RBI's Monetary Policy Committee earlier this month left the repo rate unchanged at 5.25%, as it preferred to wait and watch the progress of the war in West Asia and its impact.

 

On the fiscal side, lower oil prices and potentially stronger than expected nominal GDP growth have reduced the risk of a large slippage, ANZ said. But Nim still expects the government's fiscal deficit to widen to 4.5% of GDP in FY27, 20 bps higher than the Budget's projection of 4.3% of GDP.

 

RUPEE, BALANCE OF PAYMENTS

ANZ expects the Indian rupee to remain stable around 95.0 a dollar in the near term, thanks to the RBI's measures to bring in foreign investment inflows.

 

"On the downside, we think 93.50–94.0 is an important floor to watch. Any downward pressure on the spot rate will likely be offset by the RBI's FX absorption to fortify its FX reserves," Nim said. The Australian bank has pushed away its earlier end-2026 forecast of 97.50 by three quarters to September 2027.

 

"Any renewed volatility in oil prices, higher USD and the path of the fed funds rate remain key sources of risk for the INR," Nim said.

 

ANZ now projects India's current account deficit for FY27 at 1.4% of GDP, lower than the earlier estimate of 1.9% of GDP. India's current account deficit was 0.6% of GDP in FY26. "Lower oil prices and government measures to curb the current account deficit, such as gold import duty hike, will lower the current account deficit meaningfully," Nim said.

 

The bank also expects a $20-billion balance of payments surplus in FY27, thanks to the RBI's currency support measures announced on Jun. 6. Before the RBI's steps and with higher oil prices, ANZ had expected a BoP deficit above $50 billion in FY27, up from a deficit of $23.6 billion in FY26.  End

 

US$1 = INR 94.72

 

Reported by Shubham Rana

Edited by Avishek Dutta

 

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