In a stark projection, Goldman Sachs suggests the RBI might resort to further repo rate trimming should India-US trade negotiations prolong beyond expectations. Persistent trade issues into FY27 Q1 could erode growth impulses, urging the central bank toward accommodative stances to underpin development.
Consumption’s path to recovery is tentative, strongest among rural folk and city underclass. Bountiful crops, women-centric cash schemes for the poor, and GST cuts have empowered base-level buyers, steadily fortifying demand despite worldwide flux.
NDTV Profit’s interview with Shantanu Sengupta, Goldman Sachs’ top India economist, sets FY27 Q1 as the trade pact’s finish line. Extensions into subsequent periods risk growth derailments, calling for policy bolsters from fiscal and monetary arms.
Income-wise consumption splits reveal complexities: elite spenders’ pandemic-fueled surge is moderating; middle-class struggles intensify with hiring lags and AI shifts reshaping work. Positivity prevails macro-wise, yet cracks show.
Central policies for FY26 dialed back austerity, channeling tax relief on incomes and spends to rev consumption engines. This yielded 7.6% real GDP in 2025, contrasting nominal growth’s slump—lowest in six non-pandemic years, pinned on inflation drought.
Goldman’s insights frame trade resolution as critical. Lags therein may hasten RBI’s rate pivot, emphasizing monetary tools’ role in nurturing an economy on the mend.