Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your arguments.

Lets you show that strong growth can coexist with rising inflation and external risks, complicating the 'good shape' claim.

• Nomura forecasts 7% GDP growth in 2026-27 yet expects CPI inflation to breach the 6% upper tolerance limit, prompting expected rate hikes in October and December.
• A US Federal Reserve rate increase raises the risk of capital outflows, while FCNR(B) deposit inflows of $133 billion support the external position.
• Under the RBI Act as amended in 2016, the six-member MPC targets 4% CPI inflation within a 2 to 6% band.

Use Q1 2026-27 data to argue both sides: strong, investment-led growth with low price pressure, but risks from farm slowdown, oil, low nominal growth and jobs.

• Real GDP grew 7.8% in April to June 2026, above the RBI's 7% projection; real GFCF grew 11.9%, lifting its share in nominal GDP to 34.3% from 31.4%.
• Nominal GDP grew only 10.3%, an implied deflator of about 2.3%, which limits tax buoyancy and slows the fall in the debt-to-GDP ratio.
• Risks: agriculture slowed to 3.6% from 4.4%, alongside high crude prices, food inflation, El Niño and a prolonged West Asia conflict; services-led growth may not create enough jobs.

Use the Q1 2026-27 balance of payments to argue that strong growth and a modest CAD can coexist with external fragility when financing depends on volatile flows.

• India's CAD widened to $4.2 billion (0.5% of GDP) in April-June 2026, as the merchandise trade deficit rose to $86.1 billion, in the same quarter GDP grew 7.8%.
• Foreign portfolio investors pulled out a net $9.6 billion, turning the capital account to a $3.9 billion outflow; the BoP showed an $8.1 billion deficit and reserves fell $22.5 billion with valuation losses.
• Stabilisers remain strong: net services receipts of $51.6 billion, private transfers of $42.9 billion and net FDI of $6.1 billion; ICRA expects the CAD near 0.9% of GDP in 2026-27.

The double deflation debate lets you question whether high real growth with a low deflator reflects real strength, since the result depends on how prices are removed.

• In April to June 2026 real GDP grew 7.8% and nominal GDP 10.3%, implying a deflator of only about 2.3%.
• The new series (base 2022-23, released 27 February 2026) deflates manufacturing output and inputs separately with PPIs; if input prices rise faster, real growth can exceed nominal growth.
• Former officials including Arvind Subramanian questioned data quality, while MoSPI says methods were public and the series now uses GST, PLFS and ASUSE data.