The Reserve Bank of India (RBI) has forecasted India’s real GDP growth to be 7.6% for the financial year 2026 under a new GDP series. This growth is attributed to the resilience shown by strong services activity, manufacturing expansion, and robust domestic demand. Looking ahead to FY27, the Central Bank anticipates a growth rate of 6.9%, signaling a slight moderation due to external risks and rising cost pressures as highlighted by RBI Governor Sanjay Malhotra after the MPC meeting.
The GDP growth projection for Q1 FY27 has been revised down to 6.8% from 6.9%, while Q2 FY27 growth has been adjusted to 6.7% from 7%, influenced by global challenges such as the Iran war. Malhotra expressed concerns over increasing downside risks to global growth, particularly due to the surge in energy prices leading to inflation fears.
RBI data shows that GDP growth was at 7.8% in the December quarter of FY26, down from 8.4% in the previous quarter. The bank expects a sustained revival in private sector investment driven by high capacity utilization and a favorable food price outlook in the near term. Governor Malhotra also mentioned that the overall CPI inflation for FY27 is estimated at 4.6%, with projections of 4%, 4.4%, 5.2%, and 4.7% for Q1, Q2, Q3, and Q4 respectively.
Assuring adequate liquidity in the banking system to support the Indian economy’s productive needs, Malhotra emphasized the importance of maintaining sufficient liquidity. As of April 3, India’s forex reserves were recorded at $697.1 billion, with an improvement in net FDI compared to the previous year. The RBI remains optimistic about India’s appeal for greenfield FDI projects, expecting a sustained revival in private sector investment.
