The Reserve Bank of India (RBI) has reduced its real GDP growth projection for FY27 to 6.6 percent, down from the earlier estimate of 6.9%, reflecting concerns over the ongoing conflict in West Asia, elevated crude oil prices and weather-related risks.
Announcing the latest monetary policy decisions, RBI Governor Sanjay Malhotra said the central bank now expects the economy to expand by 6.6% in the first quarter, 6.3% in the second quarter, 6.5% in the third quarter, and 6.8% in the fourth quarter of FY27.
The growth revision marks the second downward adjustment to the RBI’s forecast this year.
The Monetary Policy Committee (MPC) unanimously voted to keep the repo rate unchanged at 5.25% while maintaining a neutral policy stance.
According to Malhotra, high-frequency indicators suggest that domestic economic activity has remained broadly stable despite the geopolitical tensions. He said private consumption continues to show resilience, while fixed investment activity has sustained momentum even in the face of rising cost pressures.
The RBI chief also noted that business sentiment remains positive and that the services sector continues to perform well despite concerns about the possible impact of artificial intelligence on jobs and business operations.
However, he cautioned that the effect of higher global energy prices is increasingly being reflected in retail markets. Rising input costs and uncertainty linked to the geopolitical situation could affect investor confidence going forward.
Malhotra said the progress and distribution of the southwest monsoon will play a key role in shaping agricultural output and rural demand. He added that strong services activity, healthy GST collections and stable employment conditions are expected to support urban consumption.
At the same time, he warned that weak global demand and higher logistics costs could hurt merchandise exports, creating additional risks for economic growth.
The revised forecast comes ahead of the government's release of GDP data for the January-March quarter of FY26 and the full-year growth figures, which will be published using the new base year of 2022-23.
