Citi: India's Goldilocks to continue in 2026, but bond market a key challenge.

• Citi's chief economist expects India's "Goldilocks" economic scenario (high growth, low inflation) to continue into 2026, but with slight moderation.
• Growth may be weaker and inflation higher in 2026 as stimulus effects fade and due to base effects.
• 2025's low inflation was driven by temporary factors like vegetable prices and GST cuts, raising questions about its sustainability.
• Rupee depreciated in 2025 due to a Balance of Payments deficit; a surplus is projected for Q1 2026, potentially stabilizing the currency.
• Increased government borrowing (₹30 lakh crore in FY27) poses a challenge for the bond market, requiring significant RBI intervention via OMOs.

Why It Matters: India's 2026 economic outlook is positive but faces fiscal and currency hurdles.