India’s Economy Seen Growing 6.9% In FY27, RBI Says Strong Domestic Demand To Support Resilience

Mumbai: The Reserve Bank of India (RBI) has said that the Indian economy is expected to remain resilient in 2026-27 despite challenges arising from global geopolitical tensions, high commodity prices and uncertain trade policies.

According to the RBI’s annual report, strong domestic demand, a stable policy environment and healthy macroeconomic fundamentals are likely to support economic growth in the coming year.

The central bank has projected India’s real GDP growth at 6.9 percent for FY27, although risks remain tilted towards the downside.

Domestic Factors Support Economy

The RBI said India’s lower dependence on exports compared to many other economies provides a cushion against global shocks.

Strong balance sheets of banks and corporates, along with the government’s continued focus on capital expenditure, are expected to support investment and economic activity.

The report also noted that trade agreements with key global partners could provide additional momentum to growth.

Agriculture Outlook Depends On Monsoon

The central bank said agricultural growth will depend largely on the progress and distribution of the south-west monsoon.

While the possibility of El Niño conditions poses a risk to crop output, the expected emergence of positive Indian Ocean Dipole (IOD) conditions later in the season could partly offset the impact.

The RBI added that improved irrigation, better farming practices and technological advancements have reduced agriculture’s dependence on rainfall compared to earlier years.

Manufacturing And Infrastructure Push

The Union Budget 2026-27 has identified seven priority sectors for focused development, including electronics, semiconductors, biopharma, rare earths, chemicals, textiles and capital goods.

Government schemes such as the Production Linked Incentive (PLI) programme and PM E-DRIVE are expected to boost manufacturing and support energy security.

Investments in freight corridors, waterways, coastal shipping and last-mile connectivity are also expected to strengthen industrial growth.

Inflation And Fiscal Outlook

The RBI projects CPI inflation at 4.6 percent in FY27, broadly in line with its target.

However, rising global fuel prices, commodity market volatility, geopolitical tensions and exchange-rate fluctuations remain key risks.

On the fiscal front, the Centre aims to reduce the fiscal deficit to 4.3 percent of GDP, while states have budgeted a consolidated fiscal deficit of 3 percent of GSDP, reflecting continued fiscal discipline.