India’s statistics agency will announce the new rebased GDP print for 3QFY26 (Oct-Dec25) on Friday, alongside the second advance estimate for FY26 (First AE 7.4% yoy vs DBSf 7.7%) and historical numbers. Calculations will be rebased from 2011-12 to 2022-23, and are expected to capture updated production structures, wider coverage, new ratios and representative/ improved government data sets especially to capture activity in the informal sector. For instance, the supply side GVA gauge for the unincorporated sector will be estimated using data from the Annual Survey of Unincorporated Sector Enterprises and the Periodic Labour Force Survey. For estimation of private consumption expenditure (PFCE), a mixed approach will be adopted, amalgamating data from the Household Consumer Expenditure Survey, direct estimation based on production and other data sources as well as commodity flow approach. Latest relevant standard i.e. COICOP 2018 has also been adopted in compilation of PFCE. Importantly, the deflator methodology will also be changed to bring it in line with international practises, with an expanded use of double deflation, amongst others. Observers will monitor the impact of these deflation-related changes on nominal and real growth. Under the current series, our forecast stands at 7.3% yoy for 3QFY26 (4Q25), with the revised number likely to be a better representative of underlying economic activity.
Benchmark 10-year INR bond yield was at the upper end of recent range by the latter half of the week, just as a recent state auction attracted firmer demand, banks stepped up purchases to replenish holdings, and an INR 250bn bond switch operation scheduled for Monday (third tranche in Feb). The switch is expected to smoothen near-term redemption pressures and partially alleviate supply concerns for FY27 issuance (maturities worth INR5.5trn). Yields are expected to trade within a relatively tight range of 6.65-6.75%, with any pullback constrained by cautious positioning ahead of upcoming GSec auction. RBI’s OMO purchases have amounted to close to half of the bond issuances until mid-Feb. The authorities’ preference to maintain a surplus liquidity balance (weighted average call rate stayed below the repo rate) is likely intended to ease money market/ short-term rates and consequently alleviate funding pressures in March, the final month of both the quarter and the fiscal year. Thereby, expectations are high that efforts to absorb excess liquidity will make a return early into the next FY. The INR steadied within narrow 90.85-90.95 range, as bunched-up maturing non-deliverables negated the benefit from a resumption in foreign equity inflows this month and softer dollar. Intervention risks will re-heighten as/when the USDINR attempts to retest 91.0, after net dollar sales added up to ~$52bn in CY2025 (outstanding forwards position ~$62bn as of Dec25), four times the scale in CY2024.
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