Mumbai, 05 August (H.S.): The Reserve Bank of India (RBI) on Wednesday raised its projection for India’s gross domestic product (GDP) growth rate for the current financial year 2026-27 to 6.7 per cent, while lowering its retail inflation forecast to 5 per cent.

RBI Governor Sanjay Malhotra, after the conclusion of the three-day bi-monthly Monetary Policy Committee (MPC) meeting on Wednesday, announced that the policy repo rate has been kept unchanged at 5.25 per cent. He said the MPC unanimously projected real GDP growth for the financial year 2026-27 at 6.7 per cent.

The RBI estimated GDP growth at 7 per cent in the first quarter, 6.4 per cent in the second quarter, 6.5 per cent in the third quarter, and 6.8 per cent in the fourth quarter of the financial year. The risks to growth projections on both sides remain balanced.

While announcing the third bi-monthly monetary policy review for FY 2026-27, Governor Malhotra said that ongoing volatility in the global economy could have some impact on domestic economic activity. However, he noted that despite global uncertainties, key indicators during the first quarter (April-June) of the current financial year reflect resilience in the domestic economy.

He said geopolitical developments have led to fluctuations in global crude oil prices, making the near-term outlook uncertain. Malhotra added that although overall inflationary pressures have remained subdued so far, risks of a broader rise in inflation persist due to increasing costs of food items, fuel, and other raw materials.

The RBI Governor stated that the retail inflation forecast based on the Consumer Price Index (CPI) for FY 2026-27 has been revised to 5 per cent. Inflation is projected at 4.7 per cent in the second quarter, 5.9 per cent in the third quarter, and 5.5 per cent in the fourth quarter. He said retail inflation for the first quarter of FY 2027-28 is expected to remain at 5.3 per cent, with risks evenly balanced on both sides.

Malhotra added that core inflation for FY 2026-27 is estimated at 4.3 per cent.

Amid global uncertainties, the RBI kept the benchmark policy repo rate unchanged at 5.25 per cent, in line with expectations. In its June monetary policy review, the central bank had projected GDP growth for FY 2026-27 at 6.6 per cent and inflation at 5.1 per cent.

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Hindusthan Samachar / Jun Sarkar