India's growth trajectory has started FY27 on a considerably stronger footing than anticipated. Q1 GDP growth of 7.8%, accompanied by GVA growth of 8.2%, points to robust underlying momentum, with the composition also encouraging- investments accelerated sharply, industrial activity strengthened, and consumption remained broadly resilient. However a deficient and uneven monsoon, intensifying El Niño conditions, fading support from GST rationalisation, an adverse statistical base and the prospect of slower public capex amid fiscal compulsions are likely to engender sequential moderation in H2. Given the strong growth traction hitherto, we have revised our FY27 GDP growth forecast higher by 50 bps to 6.9%. The inflation trajectory, meanwhile, is becoming progressively less benign. Headline CPI edged higher to 4.44% YoY in Jul-26, led by a further hardening in food prices and persistently elevated fuel inflation, even as core inflation remained reassuringly contained at 3.9%. We retain our FY27 CPI inflation forecast at 5.1%, and we expect the RBI's policy focus to pivot increasingly towards inflation management, paving the way for a 50 bps rate hike in H2 FY27. The special forex window drew USD 136 bn by Aug 31st - far beyond most optimistic assumptions We expect cumulative flows to touch USD 150 bn by Dec-26. While RBI’s FX reserves will show a significant spike in the coming weeks, so will its short forward position, along with India’s external debt position. We now project FY27 BoP surplus of USD 120 bn, heavily concentrated in Q2, with the CAD revised to 1.1% of GDP. Core liquidity is set to peak near Rs 16 tn, roughly 5.8% of NDTL and about three times the pre-announcement level, with organic normalization taking around four quarters. The RBI has already pivoted to absorption via VRRR auctions – a durable toolkit, involving any combination from among these: MSS/CMB issuances, short-dated FX swaps, outright OMO sales, a temporary CRR hike, could get deployed next. We retain our 10Y g-sec call of 7.25% by Mar-27, with a tactical call of curve flattening. On the rupee, the RBI's decision to absorb the inflow rather than let it clear through the market removes the most obvious source of near-term strength; with anticipated Fed rate tightening supporting the dollar and the India–US inflation differential widening back above 2%, we retain USDINR at 97 by Mar-27.