India's Growth Surprise: Goldman Sachs India Outlook, RBI Rate Hike & Crude Price Expectations

India’s economy demonstrates remarkable resilience, maintaining a growth trajectory of over 7% despite significant global dislocations, including geopolitical tensions and fluctuating oil prices. Santanu Sengupta, Chief India Economist at Goldman Sachs, attributes this strength to past fiscal and monetary policy support, alongside a nascent recovery in private capital expenditure across sectors like power, defense, and electric vehicles. While global capital currently favors AI-driven markets like the US and China, India’s underlying growth remains robust. However, persistent external risks, such as elevated crude oil prices and the potential for a back-loaded impact from El Nino on the winter crop, necessitate a calibrated monetary tightening cycle. The Reserve Bank of India is expected to implement further rate hikes over the coming quarters to manage inflationary pressures while navigating a challenging global macroeconomic environment.