Mumbai, India – Reserve Bank of India (RBI) Governor Sanjay Malhotra today announced that the central bank projects India's real Gross Domestic Product (GDP) growth rate to be 6.6% for the fiscal year 2026-27. This figure represents a downward revision from the previous forecast of 6.9%, primarily attributed to ongoing volatility in international markets and rising energy prices.
The announcement came at the conclusion of the Monetary Policy Committee (MPC) meeting, where the central bank also decided to maintain its neutral stance and keep the benchmark repo rate unchanged at 5.25%. This decision reflects the RBI's cautious approach amidst global economic uncertainties.
Factors Influencing the Revised Forecast
Governor Malhotra highlighted that geopolitical tensions, particularly the conflict in West Asia, are significant contributors to the international market volatility. This instability, coupled with an anticipated rise in energy prices, is expected to weigh on overall economic activity. The full extent of this impact, he noted, will depend on the evolving geopolitical landscape.
The quarterly growth projections for FY 2026-27 are as follows:
- Q1: 6.6%
- Q2: 6.3%
- Q3: 6.5%
- Q4: 6.8%
Despite the challenges posed by external factors, the Governor expressed optimism regarding the sustained momentum in India's services sector, which is expected to continue supporting economic activity throughout the year. He also mentioned that, based on the new GDP series, India's growth for the previous fiscal year stood at a robust 7.6%.
Monetary Policy Stance Remains Unchanged
The MPC's decision to hold the repo rate at 5.25% signals the RBI's intent to monitor economic developments closely before making any adjustments to its monetary policy. The central bank's neutral stance underscores its readiness to either tighten or ease policy as circumstances dictate, aiming to balance growth with inflation control.
Observers will now be closely watching global events and domestic economic indicators to assess the trajectory of India's growth in the coming months, particularly how the services sector's resilience can offset external headwinds.