India's Goldilocks Economy: Softer Glow in 2026 Amid Growth, Inflation Shifts

• India's "Goldilocks" economy, characterized by high growth and low inflation, is expected to see a "softer glow" in 2026, though remaining largely resilient.
• GDP growth is projected to moderate to 6.8% in 2026 from 7.5% in 2025, with economists split on private investment recovery.
• CPI inflation is forecast to normalize to 4% in 2026, up from an unusually subdued 1.9% in 2025, with views divided on its exact trajectory.
• Fiscal deficit is set to narrow to 4.3%, but focus shifts to India's high debt-to-GDP ratio (84%); bond yields may rise despite RBI support.
• Capital flows remain a concern after FPI outflows, though $7-8 billion net inflows are projected for 2026; rupee expected to stabilize.

Why It Matters: India's economy faces a resilient yet moderated outlook for 2026, with growth easing and inflation normalizing.