Aditi Nayar

Aditi Nayar analyses the Budget's fiscal prudence, higher public capex via states, a 4.3 per cent deficit target, debt consolidation, and the impact of higher gross borrowings on bond yields

Economic Survey 2025-26 signals an adjustment phase ahead, with moderate growth, stable inflation, fiscal consolidation and policy shifts shaping India's macro outlook

The GoI had already provided relief on the personal income tax front in the Union Budget for FY2026, with the revenue foregone on account of this pegged at ₹1.0 trillion

Interestingly, the US Federal Reserve's December 2025 meeting is a few days after the MPC's last scheduled review for 2025, in which it may cut rates further.

ICRA estimates that around Rs. 2.5 trillion capex will be incurred by March 2026, which is 60-65 per cent of the total estimated capex

The 15th FC had recommended a sizeable Rs. 2.9 trillion as revenue deficit grants (RDG) to a select number of states for FY2022-FY2026

Economic hit due to US tariff decisions likely to be accentuated

With inflation expected to rise back to above 4 per cent by Q4-FY26, the Monetary Policy Committee has capitalised upon the available headroom to frontload rate action

We expect the GDP growth to print at 6.2 per cent in FY26, marginally below the 6.3 per cent projected by us for FY25, said Aditi Nayar of Icra

Looking ahead, we believe that the growth-inflation outlook suggests that there is room for another 25 bps rate cut in either the April or the June 2025 meetings

RBI Monetary Policy: With the Union Budget for FY-2026 behind us, the focus now shifts to the next big event on the horizon - the Monetary Policy Committee's (MPC) final meeting for FY-2025 on Feb 7

Revenue spending growth of 6.7 per cent is somewhat higher than our forecast

We broadly concur with the Survey's assessment of a pick-up in rural demand on the back of improved crop output, disinflation, and an uptick in domestic investment activity

The CPI inflation for Q3 FY2025 is expected to overshoot the MPC's estimate of 4.8 per cent for the quarter by at least 60-70 bps

On the personal income tax front, the Budget brought in some modest tweaks, which should support sentiment and consumption for salaried individuals

The Union Budget for fiscal 2024-25 (FY25) will be presented on July 23, 2024

The surge in the headline CPI inflation has expectedly proved to be transient. The print had cooled off to 6.8 per cent in August 2023 from the 15-month high of 7.4 per cent in July

It says once the global shocks of the pandemic and 2022's unpleasant spike in commodity prices fade away, the Indian economy is likely to record a faster growth during the rest of this decade

Another rate hike predicted for September 2022, even if the quantum is as small as 10 bps

With front-loaded rate hikes by the US Fed, the US dollar will remain relatively strong in the immediate term