Key points
- Real GDP grew 7.7% (provisional estimate, new 2022-23 base series).
- CPI inflation fell to 2.1% for the year, and the RBI cut the repo rate by a total of 100 basis points to 5.25%.
- The Nifty 50 fell 5.1%, the weakest fiscal year since 2019-20; the 10-year yield rose 45 basis points to about 7.03%.
- The rupee fell 9.9% to about 94.78 per US dollar amid foreign outflows, US tariffs and a conflict in West Asia.
The year in brief
FY2025-26 showed how domestic fundamentals and market prices can diverge. The economy grew 7.7%, with the final quarter at 7.8%, and inflation fell to the lowest levels recorded in the CPI series. Yet external pressures dominated asset prices: higher US tariffs on Indian goods from August 2025, sustained selling by foreign portfolio investors, and a conflict in West Asia in March 2026 that raised oil prices.
The statistical base itself changed during the year. A new GDP series with base year 2022-23 was released in February 2026, and a new CPI series followed. Comparisons with earlier years need care.
| Indicator | Value | Note |
|---|---|---|
| Real GDP growth | 7.7% | Provisional estimate, June 2026, on the new 2022-23 base series. |
| CPI inflation, annual average | 2.1% | MoSPI / RBI |
| RBI repo rate, year-end | 5.25% | RBI |
| 10-year government bond yield, year-end | ≈7.03% | Approximate, last trading day |
| Nifty 50, year-end close | 22,331.40 | −5.1% over the year, price only |
| USD/INR, year-end | ≈94.78 | Rupee weaker by ≈9.8% |
| Central government fiscal deficit | 4.4% of GDP | Provisional actuals |
Policy, tax and regulation
The RBI cut the repo rate by 25 basis points in April 2025, 50 basis points in June 2025 and 25 basis points in December 2025, ending the year at 5.25% with a neutral stance. It also reduced the cash reserve ratio by 100 basis points in stages. Bank credit to the commercial sector grew 15.7%, and credit to micro and small enterprises grew 33.1%, according to the RBI Annual Report.
Three structural changes matter for businesses. GST rates were rationalised from September 2025, moving most goods into two main slabs. The four labour codes came into force on 21 November 2025, changing wage definitions and statutory payroll obligations. The Digital Personal Data Protection Rules, 2025 were notified in November 2025, with obligations phasing in over 18 months. The central government's fiscal deficit was 4.4% of GDP.
Markets
Despite lower policy rates, longer-term borrowing costs rose. The 10-year government bond yield ended at about 7.03%, 45 basis points higher than a year earlier, after a sharp rise in March 2026. The Nifty 50 ended at 22,331.40, down 5.1%. The rupee closed at about 94.78 per US dollar, a 9.9% decline and its steepest annual fall in 14 years, despite substantial RBI intervention in the currency market.
What it meant for businesses
Short-term borrowers linked to the repo rate saw loan rates fall, but long-term funding did not become cheaper by year-end. Importers faced a much weaker rupee and higher energy costs. Exporters to the United States faced tariff uncertainty. Businesses also had to reprice products after the GST changes and restructure salary components under the labour codes.
Long-term perspective
A cut in the policy rate does not guarantee cheaper money across all maturities, and strong domestic growth does not protect against external shocks. The priorities this year highlighted are:
- Separate short-term and long-term funding decisions; they respond to different forces.
- Quantify currency exposure in rupees, and stress-test margins for a significantly weaker rupee.
- Review payroll structure against the labour codes and pricing against the new GST rates, and update data-protection practices ahead of the DPDP compliance deadlines.
Sources and method
- Ministry of Statistics and Programme Implementation (MoSPI): national accounts press releases and CPI releases.
- Reserve Bank of India: Monetary Policy Statements, Annual Reports and the Database on Indian Economy (DBIE), including the USD/INR reference rate.
- National Stock Exchange of India: Nifty 50 index closing values.
- Ministry of Finance / Controller General of Accounts: Union Budget documents and provisional accounts (fiscal deficit).
- MoSPI provisional estimates of annual GDP for 2025-26, reported by All India Radio News, 5 June 2026 (newsonair.gov.in).
- RBI Annual Report 2025-26, as reported by ThePrint, June 2026: CPI inflation 2.1%, 100 bps of repo cuts, credit growth, fiscal deficit 4.4%.
- Upstox News, 'Stock market in FY26': Nifty 50 close of 22,331.40 on 30 March 2026.
- ThePrint / PTI, 'Rupee posts biggest annual decline in 14 years, tumbles 9.88 pc in FY26', 30 March 2026.
- Business Recorder / Reuters, India 10-year bond yield close of 7.0345% on 30 March 2026, up 45 bps over the fiscal year.
- Drishti IAS summary of MoSPI's new GDP series with base year 2022-23 (revised growth: FY24 7.2%, FY25 7.1%).
Fiscal year runs 1 April to 31 March. GDP growth is shown as first published after the year closed; later official revisions are noted in the table. Market levels are closing values on the last trading day of the fiscal year; bond yields and exchange rates are rounded. Index changes are price only and exclude dividends.