The Reserve Bank of India’s Monetary Policy Committee (MPC) on Wednesday revised its GDP growth forecast for FY2025–26 upwards to 6.8%, compared with 6.5% projected in August.
RBI Governor Sanjay Malhotra projected India’s quarterly GDP growth for FY26 at 7.8% in Q1, 7% in Q2, 6.4% in Q3, and 6.2% in Q4, noting that the risks to growth are “evenly balanced.”
The central bank left the repo rate unchanged at 5.5%, after cutting rates by a total of 100 basis points since February. It had paused at the previous MPC meeting in August.
As per Bloomberg citing a senior official, tax cuts are expected to cushion the impact of tariffs and support growth at the higher end of the government’s forecast range of 6.3%–6.8% for FY26. The RBI, meanwhile, has pegged growth at 6.5% for the year.
According to the Economic Survey presented in Parliament by Finance Minister Nirmala Sitharaman on January 26, 2025, India’s economy is projected to expand within the 6.3%–6.8% band in FY26.
Earlier, EY revised its forecast for India’s real GDP growth in FY26 to 6.7%, up from its earlier estimate of 6.5%. The firm, in its September edition of Economy Watch, said the upgrade factors in the expected boost from GST 2.0 reforms, stronger domestic demand, and the prospect of monetary easing, even as global headwinds weigh on exports.
Meanwhile, the Asian Development Bank (ADB) has cut India’s growth forecast for FY26 to 6.5%, down from its April estimate of 6.7%, citing the impact of the 50% U.S. tariffs on Indian exports. It also lowered its projection for FY27 to 6.5% from 6.8% earlier.
“The revisions reflect downgrades for India, hit by steep tariff hikes, and Southeast Asia, driven by a worse and more uncertain global environment,” ADB said in a report. “India faces the steepest tariff hikes among developing Asian economies, prompting a downgrade in its growth outlook.”
The MPC flagged that the global environment remains uncertain, with trade disputes, volatile commodity prices, and geopolitical tensions still weighing on India’s growth outlook. At the same time, resilient rural consumption, robust services activity, steady public capital expenditure, and a normal monsoon are expected to keep domestic demand strong.
Industrial activity, particularly in electricity and mining, remains weak, the RBI noted.
RBI Governor Sanjay Malhotra projected India’s quarterly GDP growth for FY26 at 7.8% in Q1, 7% in Q2, 6.4% in Q3, and 6.2% in Q4, noting that the risks to growth are “evenly balanced.”
The central bank left the repo rate unchanged at 5.5%, after cutting rates by a total of 100 basis points since February. It had paused at the previous MPC meeting in August.
As per Bloomberg citing a senior official, tax cuts are expected to cushion the impact of tariffs and support growth at the higher end of the government’s forecast range of 6.3%–6.8% for FY26. The RBI, meanwhile, has pegged growth at 6.5% for the year.
According to the Economic Survey presented in Parliament by Finance Minister Nirmala Sitharaman on January 26, 2025, India’s economy is projected to expand within the 6.3%–6.8% band in FY26.
Earlier, EY revised its forecast for India’s real GDP growth in FY26 to 6.7%, up from its earlier estimate of 6.5%. The firm, in its September edition of Economy Watch, said the upgrade factors in the expected boost from GST 2.0 reforms, stronger domestic demand, and the prospect of monetary easing, even as global headwinds weigh on exports.
Meanwhile, the Asian Development Bank (ADB) has cut India’s growth forecast for FY26 to 6.5%, down from its April estimate of 6.7%, citing the impact of the 50% U.S. tariffs on Indian exports. It also lowered its projection for FY27 to 6.5% from 6.8% earlier.
“The revisions reflect downgrades for India, hit by steep tariff hikes, and Southeast Asia, driven by a worse and more uncertain global environment,” ADB said in a report. “India faces the steepest tariff hikes among developing Asian economies, prompting a downgrade in its growth outlook.”
The MPC flagged that the global environment remains uncertain, with trade disputes, volatile commodity prices, and geopolitical tensions still weighing on India’s growth outlook. At the same time, resilient rural consumption, robust services activity, steady public capital expenditure, and a normal monsoon are expected to keep domestic demand strong.
Industrial activity, particularly in electricity and mining, remains weak, the RBI noted.
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