Given the country’s robust economic position, the Reserve Bank of India (RBI) has raised India’s real GDP growth projection for the 2026-27 fiscal year (FY27) to 6.7 percent. This new projection by the central bank is higher than the 6.6 percent estimate made during its previous meeting. RBI Governor Sanjay Malhotra stated that despite various global challenges, India remains the world’s fastest-growing major economy.
Quarterly Growth Projections
The central bank has also shared quarterly GDP growth figures for FY27:
First Quarter (Q1): 7.0 percent
Second Quarter (Q2): 6.4 percent
Third Quarter (Q3): 6.5 percent
Fourth Quarter (Q4): 6.8 percent
No Change in Interest Rates
The RBI’s Monetary Policy Committee (MPC) has kept the key policy rate—the ‘repo rate’—unchanged at 5.25 percent. Additionally, the Standing Deposit Facility (SDF) rate has been maintained at 5 percent, and the Marginal Standing Facility (MSF) rate at 5.5 percent. Considering market conditions, the bank has retained its ‘neutral’ stance.
Global Challenges and Domestic Strength
According to the Governor, the imposition of new tariffs by the US has created uncertainty in global trade. Volatility in crude oil prices and financial markets persists due to the crisis in West Asia. Despite these external pressures, India’s domestic economic situation remains extremely strong. The country’s manufacturing sector, a good monsoon, and a surge in rural demand have provided significant support to economic growth.
Expectation of Relief on Inflation
Governor Malhotra also noted that efforts to fully bring inflation under control in the country are proving successful. Consequently, the RBI has lowered its inflation projection for FY27 to 5.0 percent. However, he cautioned that initial stress persists in some sectors; therefore, the central bank will keep a close watch on prices while simultaneously boosting growth.