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RBI Set to Raise Inflation Forecast, Warns of GDP Risks Amid Global Turmoil

The Reserve Bank of India is expected to revise its inflation projections upward from the current 4.1% forecast for the first half of FY2026 in its upcoming policy review. A PhillipCapital report highlights simultaneous downside risks to India's GDP growth, projected at 7.1%, due to global headwinds. Elevated crude oil prices and currency pressures are cited as primary factors creating upside inflation risks and growth concerns. The April 8 policy review has gained increased importance amid heightened global uncertainty stemming from geopolitical tensions.

Key Points: RBI May Revise Inflation Up, GDP Faces Downside Risks: Report

  • Inflation projection likely above 4.1%
  • GDP growth faces downside risks
  • Global uncertainties and oil prices key factors
  • April 8 policy review significance heightened
  • Currency pressures adding to challenges
2 min read

RBI likely to revise inflation upwards; GDP faces downside risks amid global uncertainties: Report

RBI's upcoming policy review likely to project higher inflation and flag GDP growth risks due to global uncertainties, oil prices, and currency pressures.

RBI likely to revise inflation upwards; GDP faces downside risks amid global uncertainties: Report
"there are downside risks to GDP growth and upside risk to inflation - PhillipCapital Report"

New Delhi, April 7

The Reserve Bank of India is expected to revise its inflation projections upward while flagging risks to GDP growth in its upcoming policy review, according to a report by PhillipCapital.

The report said that "the latest available inflation projection is 4.1%, for the first half, i.e. April-September 2026" but added that "it will be revised upward, and the guidance for second half i.e. October-March may be issued."

In the policy review meeting on 6 February 2026, the RBI projected CPI inflation for Q1, i.e. April-June 2026, at 4% and that for Q2, i.e. July-Sep 2026, at 4.2%. That is, CPI inflation for first half, April-Sep 2026, was projected at 4.1%.

Highlighting the importance of the upcoming policy, the report noted that "the aspect we are looking forward to is projections on inflation and GDP," especially amid evolving global conditions.

The report further indicated that the extent of revision remains uncertain, stating, "the question is, to what extent it will be notched up."

On the trajectory, it added that if the RBI's inflation projection is "little bit higher than 4.1%, say 4.3% or 4.4%, it would not move the needle much," but "if it is noticeably higher, e.g. nearer to the 5% handle, it will move the market."

On growth, the report flagged emerging concerns, noting that "there are downside risks to GDP growth and upside risk to inflation," particularly due to elevated crude oil prices and currency pressures.

It also cited projections indicating that "real GDP growth is projected at 7.1%... [with] downside risk," with risks linked to geopolitical tensions and their impact on investment, inflation and trade.

The report emphasised that key assumptions, such as crude oil prices and exchange rate levels, will shape RBI's projections, stating that the RBI will assume revised levels for crude oil and rupee for inflation projections.

Overall, the report underlined that inflation and growth projections in the April 8 policy review have assumed increased significance amid heightened global uncertainty due to West Asia crisis.

- ANI

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Reader Comments

S
Shreya B
Global uncertainties are really affecting us. The West Asia crisis and oil prices are beyond our control, but I hope the government has a plan to shield the economy. Growth must not suffer. 🇮🇳
A
Aman W
As someone who follows the markets, a revision to near 5% will definitely cause volatility. The RBI's communication tomorrow will be key. They need to manage expectations without causing panic.
P
Priyanka N
The focus always seems to be on inflation, which is important, but the downside risks to GDP growth of 7.1% are equally critical. We need job creation and investment to continue. Let's not slow down the engine.
D
David E
Reading this from an international perspective. India's resilience has been impressive, but these global headwinds are a real test. The RBI's policy stance will be watched closely by foreign investors.
K
Karthik V
With elections behind us, the government and RBI should work in tandem. Short-term pain for long-term stability is acceptable, but communication must be clear. Jai Hind!
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Nisha Z
I respectfully disagree with the constant fear-mongering around inflation. Yes, it's a concern, but our fundamentals are strong. Media reports like this sometimes create more anxiety than necessary. Let's trust our institutions.

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