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RBI Cuts GDP Growth to 6.9%, Hikes Inflation Forecast to 4.6%

The Reserve Bank of India has lowered its GDP growth projection for the current financial year to 6.9%. Simultaneously, it has raised the Consumer Price Index inflation forecast to 4.6%, citing risks from elevated crude oil prices and global tensions. The central bank's Monetary Policy Committee unanimously decided to keep the policy repo rate unchanged at 5.25%. Governor Sanjay Malhotra presented a quarterly growth and inflation trajectory, warning that imported energy costs could pressure prices.

Key Points: RBI Lowers GDP Growth, Raises Inflation Forecast for FY27

  • GDP growth forecast lowered to 6.9%
  • Inflation projection hiked to 4.6%
  • Policy repo rate unchanged at 5.25%
  • Global uncertainties and crude prices cited as risks
2 min read

RBI lowers GDP growth for FY 27 to 6.9%; Inflation hiked to 4.6% due to West Asia crisis, spike in crude prices

RBI Governor projects 6.9% GDP growth and 4.6% inflation for FY27, citing global risks. Repo rate remains unchanged at 5.25%.

RBI lowers GDP growth for FY 27 to 6.9%; Inflation hiked to 4.6% due to West Asia crisis, spike in crude prices
"Headline inflation for January and February stayed below the target at 2.7 per cent and 3.7 per cent, respectively - Sanjay Malhotra"

New Delhi, April 8

Real GDP growth for the current year is projected at 6.9 per cent, the Governor of Reserve Bank of India, Sanjay Malhotra, said on Wednesday.

The Governor projected that the growth trajectory for the year showed a steady pattern across all four quarters. The central bank estimated first-quarter growth at 6.8 per cent, followed by 6.7 per cent in the second quarter. Projections for the third and fourth quarters stood at 7 per cent and 7.2 per cent, respectively. Under the new GDP series, growth for the 2026 fiscal year was estimated at 7.6 per cent.

"Headline inflation for January and February stayed below the target at 2.7 per cent and 3.7 per cent, respectively," Malhotra stated. "Inflation in fuel terms remained modest during this period. For the full year, the Consumer Price Index inflation is projected at 4.6 per cent."

The quarterly inflation outlook placed the first quarter at 4 per cent and the second quarter at 4.4 per cent. Price pressures are expected to rise to 5.2 per cent in the third quarter before moderating to 4.7 per cent in the final quarter. The Governor warned that elevated energy and other commodity prices are likely to impact growth this year, particularly as imported crude oil prices could push inflation higher.

The Reserve Bank of India also kept the policy repo rate unchanged at 5.25 per cent in the first monetary policy announcement of the financial year 2026-27, citing rising global uncertainties and geopolitical tensions.

Announcing the decision, Malhotra said that the Monetary Policy Committee (MPC) unanimously voted to maintain the policy repo rate under the liquidity adjustment facility at 5.25 per cent.

Governor stated, "After the detailed assessment of the evolving macroeconomic and financial developments and the outlook, the MPC voted unanimously to keep the policy repo rate unchanged under the liquidity facility at 5.25 per cent. Consequently, the SDR rate remains at 5 per cent and the MSF rate and the bank rate at 5.5 per cent".

"Consequently, the Standing Deposit Facility (SDF) rate remains at 5 per cent and the Marginal Standing Facility (MSF) rate and the bank rate at 5.5 per cent," he said.

The MPC meeting was held on April 6, 7 and 8 to assess the evolving macroeconomic and financial conditions before arriving at the decision.

- ANI

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Reader Comments

R
Rohit P
Inflation projection hiked to 4.6% is concerning. Petrol-diesel prices will pinch the middle class again. RBI's hands are tied because of global factors, but I wish there was more focus on boosting domestic manufacturing to reduce our crude import dependency in the long run.
A
Aman W
The quarterly growth trajectory looks promising - ending at 7.2% in Q4 shows resilience. The repo rate staying unchanged is good news for my home loan EMI, at least for now. Fingers crossed the monsoon is good this year to help control food prices.
S
Sarah B
As someone working in exports, the global uncertainty is palpable. RBI's cautious stance is understandable. A slight growth downgrade is prudent forecasting. The key will be how well Indian businesses can adapt to these volatile commodity prices.
V
Vikram M
While the overall numbers seem managed, I have a respectful criticism. The communication could be clearer on what specific steps a common person should take. "Elevated energy prices" means my monthly budget is going up. Some practical guidance would help.
K
Karthik V
The fact that Q3 inflation is projected at 5.2% is a red flag. That's the festival season! If prices of essentials shoot up during Diwali, it will hurt everyone's celebrations. Government needs to proactively build buffer stocks.

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