Page 23 - Policy Economic Report - September 2026

POLICY AND ECONOMIC
OIL & GAS MARKET

India GDP position

India continues to anchor the South Asian growth outlook. ADB has raised its forecast for South Asia's
2026 growth to 6.4%, from 6.0% in its July outlook, with the upward revision driven primarily by the
stronger outlook for India. India is projected to grow by 7.0% in FY2026, compared with the South Asian
regional average of 6.4%, while the regional forecast for 2027 stands at 6.5%.

The September 2026 ADO projects India's GDP growth at 7.0% in FY2026 and 7.1% in FY2027. The FY2026
forecast represents an upward revision of 0.4 percentage points from the July projection and reflects
stronger public investment, resilient domestic activity and robust export performance, particularly in
services and electronics. For FY2027, the forecast has been moderated from the earlier projection
primarily because of the higher growth base in FY2026 and the expected effects of continuing trade,
energy and weather-related pressures.

The latest GDP performance also reinforces India's position within the region. India's economy
recorded 7.8% year-on-year GDP growth, while the broader developing Asia and Pacific region
experienced a moderation in growth during Q2 2026. ADB notes that India was among the economies
where net exports strengthened significantly, particularly as global demand for electronics, advanced
microchips and computing infrastructure supported exports.

The composition of India's growth is also noteworthy. Services, manufacturing, investment and
technology-related exports are increasingly supporting economic activity, while public capital expenditure
continues to provide an important foundation for private-sector investment. ADB expects services and
construction to remain relatively robust through FY2026 and FY2027, although weaker agricultural output
and higher input costs could weigh on some sectors.

Inflation in India

According to Ministry of Statistics & Programme Implementation, year-on-year inflation rate based on All
India Consumer Price Index (CPI) with base year 2024 for the month of August, 2026 over August, 2025 is
4.82%(Provisional). Corresponding inflation rates for rural and urban are 5.23% and 4.31%, respectively.

National Level Indices

India's retail inflation, measured by the Consumer Price Index (CPI) with base year 2024=100, increased
to 4.82% in August 2026 (provisional) from 4.45% in July 2026, marking a continued rise in headline
inflation. According to the National Statistics Office (NSO), inflation in the rural sector increased to 5.23%,
while urban inflation rose to 4.31%, compared with 4.84% and 3.96%, respectively, in July. The
corresponding All India CPI (General) index increased from 107.95 in July to 108.74 in August.

The increase in headline inflation was accompanied by a sharper rise in food inflation. Inflation based on
the All India Consumer Food Price Index (CFPI) increased from 5.52% in July to 5.95% in August, with rural

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