RBI raises FY27 GDP growth forecast to 6.7 pc, projects inflation at 5 pc: Governor Malhotra
New Delhi, August 5
The Reserve Bank of India on Wednesday revised its real GDP growth forecast for FY27 upward to 6.7 per cent from the earlier estimate of 6.6 per cent, while reducing Consumer Price Index inflation to 5 per cent for the current financial year from earlier forecast of 5.1 per cent.
Announcing the decisions of the Monetary Policy Committee (MPC), RBI Governor Sanjay Malhotra said the Indian economy is expected to grow by 7 per cent in the first quarter of FY27, with growth likely to moderate to 6.8 per cent in the fourth quarter of the financial year.
"Growth continues to be supported by the resilient domestic demand, sustained expansion in manufacturing and services activity, and robust exports." Governor noted.
The RBI also lowered its inflation forecast for FY27 by 10 basis points to 5 per cent from its earlier projection. The central bank expects core inflation to average 4.3 per cent during the financial year.
Malhotra said headline CPI inflation has risen above the RBI's target in line with expectations, although the increase recorded in June was lower than anticipated. He attributed the recent inflationary pressures largely to supply-side factors.
According to the Governor, headline inflation is expected to increase further in the near term and peak during the third quarter of FY27, primarily due to food and fuel prices, before moderating in the subsequent quarters.
"Headline inflation is expected to rise further in the near term. It is expected to peak in Q3 of this year, primarily due to food and fuel, and thereafter moderate," Malhotra said.
He added that underlying price pressures remain contained. Core inflation, excluding food and fuel, remained unchanged at 3.9 per cent in both May and June despite higher input costs. The RBI expects headline and core inflation to gradually converge by the end of FY27.
Malhotra also noted that core inflation excluding precious metals, which has remained benign for some time, is expected to align with overall core inflation towards the end of the financial year.
The Monetary Policy Committee announced its policy decisions after a three-day meeting held between August 3 and 5, outlining the RBI's updated assessment of India's growth and inflation outlook.
— ANI
Reader Comments
Good to see the RBI maintaining a balanced approach. Growth is resilient, but the Q3 inflation peak due to food and fuel is a bit worrying. Let's hope the monsoon stays good and supply-side issues ease soon. The GDP numbers are a silver lining though! ✨
All these projections are good on paper, but the ground reality for small businesses and salaried folks is still tough. 5% inflation might be 'controlled' statistically, but it doesn't feel that way when you buy vegetables or pay for fuel. RBI needs to be more proactive, not just optimistic.
The 7% Q1 growth estimate sounds very promising! The resilience of domestic demand and exports is a testament to our economy's strength. Let's hope infrastructure and manufacturing continue to push us forward. Proud of the direction we're heading! 🇮🇳📈
I understand that food and fuel are driving the inflation spike, but for the average Indian, these are the essentials! The RBI should focus more on core inflation control. A 5% projection feels like a compromise, not a solution. On the growth side, let's see if 6.7% actually reaches the grassroots.
Great news! The RBI's forecast looks stable and consistent. The fact that core inflation is contained at 3.9% is a positive sign. With supply-side improvements, we can hopefully see inflation dip below 5% soon. Fingers crossed for a prosperous FY27! 🤞📊
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