Mumbai, June 5 (HS): The Reserve Bank of India (RBI) has lowered its Gross Domestic Product (GDP) growth forecast for the current financial year 2026–27 to 6.6 per cent. The central bank had earlier projected GDP growth at 6.9 per cent in its April policy review.

Announcing the decisions of the three-day meeting of the Monetary Policy Committee (MPC) during the second bi-monthly monetary policy review of the current fiscal on Friday, RBI Governor Sanjay Malhotra said that several high-frequency indicators suggest that domestic economic activity has remained largely resilient despite the challenges that have emerged since the onset of the crisis.

He stated that the Purchasing Managers' Index (PMI) data for India's manufacturing and services sectors indicate that both segments continue to remain strong, while business sentiment and expectations remain positive.

The RBI Governor noted that on the demand side, private consumption has remained robust. Stable investment activity has also maintained momentum despite rising cost pressures. Merchandise exports recorded strong growth in April despite higher freight and insurance costs.

Taking all these factors into account, Malhotra said that the RBI now expects real GDP growth for FY 2026–27 to be 6.6 per cent. The central bank has projected growth of 6.6 per cent in the first quarter, 6.3 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 fiscal year.

Malhotra said that overall economic conditions remain broadly strong. However, he cautioned that rising energy and other raw material prices, along with supply disruptions, could exert pressure on economic activity going forward.

He observed that while diversification of imports in affected commodities could help improve supply availability, it would likely come at a higher cost. The RBI Governor added that the overall impact would depend on the duration of the West Asia crisis, the time required for supply chains to normalize, and how the burden is shared among various stakeholders.

At the same time, he noted that weak global demand and elevated logistics costs continue to pose challenges for merchandise exports. However, services exports are expected to maintain their momentum, supported by sustained global demand for Indian services.

Malhotra further said that services exports have remained resilient and continue to perform well, reflecting steady international demand despite concerns surrounding the growing adoption of Artificial Intelligence (AI).

Hindusthan Samachar / Jun Sarkar