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Business
India's GDP growth to dip to 5.5‑6% in H2 FY27 as spending cuts bite, says CLSA
✍️ Asianet Newsable
🗓 02 Oct 2026, 02:37 PM
👁 11
CLSA projects India's economy will slow to between 5.5% and 6% in the second half of fiscal year 2027, driven by tighter fiscal spending.
CLSA, the Singapore‑based investment bank, revised its outlook for India’s gross domestic product, forecasting a slowdown to a 5.5‑6% growth rate in the second half of fiscal year 2027. The estimate reflects the firm’s assessment of the impact of recent fiscal consolidation measures announced by the central government.
The bank attributes the deceleration to a combination of reduced public‑sector spending and tighter budgetary discipline, which are expected to curb demand in sectors that have previously benefited from higher fiscal outlays. Global headwinds, including slower trade growth, also feature in the projection.
Analysts note that the revised pace still keeps India above many emerging‑market peers, but it marks a noticeable retreat from the 7%‑plus expansion recorded in the earlier part of FY27. The outlook may influence monetary‑policy deliberations and investor sentiment as the country approaches the next budget cycle.
Policy makers are likely to balance the need for fiscal prudence with growth‑supportive measures, while markets will watch for any signals that could adjust the trajectory before the second half of the fiscal year begins.
The bank attributes the deceleration to a combination of reduced public‑sector spending and tighter budgetary discipline, which are expected to curb demand in sectors that have previously benefited from higher fiscal outlays. Global headwinds, including slower trade growth, also feature in the projection.
Analysts note that the revised pace still keeps India above many emerging‑market peers, but it marks a noticeable retreat from the 7%‑plus expansion recorded in the earlier part of FY27. The outlook may influence monetary‑policy deliberations and investor sentiment as the country approaches the next budget cycle.
Policy makers are likely to balance the need for fiscal prudence with growth‑supportive measures, while markets will watch for any signals that could adjust the trajectory before the second half of the fiscal year begins.