RBI revises India's growth projection to 6.8 per cent from 6.5 per cent for FY 26

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The RBI Governor Sanjay Malhotra on Wednesday announced that the repo rate will remain unchanged at 5.5 per cent. While speaking about the repo rate, the governor also highlighted that because of the good monsoon and GST rate rationalisation, the Reserve Bank of India (RBI) has revised the growth projections in India for FY 26 upwards.

As reported by news agency ANI, the gross domestic product (GDP) growth forecast for FY26 has been revised upward to 6.8 per cent, with quarterly estimates of 7 per cent in Q2 as against 6.7 per cent announced earlier, 6.4 per cent in Q3 as compared to 6.6 per cent earlier, and 6.2 per cent in Q4 as against 6.3 per cent projected earlier.

Growth for Q1 of the next financial year, FY27, is projected at 6.4 per cent, which is 0.1 per cent higher than the 6.6 per cent predicted for the last quarter of FY26.

Considering that the global tensions have been a considerable factor amid the growth, India and US trade tensions have been a significant factor in the last few days. As reported by news agency ANI, the growth projections in Q3, Q4 and Q1 of FY27 were revised downwards partly due to 50 per cent tariffs by the US on Indian imports.

Speaking on the tariffs imposed by the US, the RBI Governor Sanjay Malhotra said US tariffs will moderate exports; however, he added that government policy steps may offset some impact of global headwinds.

The governor noted that the implementation of several growth-inducing structural reforms, many of which were announced by PM Modi on 15 August, including the streamlining of GST, are expected to offset some of the adverse effects of the external adverts, reported ANI.

Taking all these factors into account, RBI governor Sanjay Malhotra stated that "real GDP growth for this year is now projected at 6.8 per cent. This is a revision from our earlier forecast of 6.5 per cent. Q2 now is projected at 7 per cent, Q3 at 6.4 per cent and Q4 at 6.2 per cent. Real GDP growth for Q1 next year is projected at 6.4 per cent. The risks are evenly balanced," as cited by news agency ANI.

Despite the uncertain global trade environment caused by ongoing tariff announcements and trade negotiations, the Reserve Bank of India (RBI) maintained its GDP growth projection for the current fiscal year 2025-26 at 6.5 per cent, which has since been revised upward to 6.8 per cent.

(With inputs from ANI)