Although high-frequency indicators, such as sales of passenger vehicles, two-wheelers and tractors, were robust in July, caution is warranted. Nomura Research sees four headwinds in H2FY27. “Unfavourable base effects will be at play from Q2FY27 (July-September) onwards, with GDP growth last year averaging around 8% for the next three quarters (reflecting the GST boost),” said a Nomura report on 1 September. It warned that any government expenditure cuts, particularly in capital expenditure, could drag down growth and risk a 20 basis point slippage in the FY27 fiscal deficit target of 4.3% of GDP.
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