New Delhi, October 7 (Daily Kiran) : The Reserve Bank of India (RBI) has reaffirmed its GDP growth forecast for the fiscal year 2026-27 at 7.1%. Governor Sanjay Malhotra announced this during a press conference following the Monetary Policy Committee (MPC) meeting. He expressed confidence in the resilience of the Indian economy despite global uncertainties and inflationary pressures.
Malhotra highlighted that domestic economic activities have remained robust, even in the face of international challenges. The first quarter of FY 2026-27 saw a real GDP growth of 7.8%, driven by strong domestic demand and investment.
The RBI projects a growth rate of 7.2% for the second quarter, followed by 6.9% in the third quarter and 6.8% in the fourth quarter. The consistent 7.1% growth forecast for the first quarter of the next fiscal year reflects the central bank’s confidence in the economy.
In terms of business activity, both the manufacturing and services sectors are on an expansion path, although growth rates have slowed compared to the previous quarter. The Purchasing Managers’ Index (PMI) for manufacturing and services remained stable during the second quarter.
However, inflation remains a concern. The governor noted that food inflation is becoming more widespread, with significant price increases for items like sugar and onions. Both food and fuel inflation saw rises in August, partly due to base effects.
The RBI is closely monitoring inflation trends, including expectations, pricing behavior from companies, core inflation, and various economic indicators.
In light of these challenges, the RBI has adjusted its policy rates, increasing the Standing Deposit Facility (SDF) rate to 5.25% and the Marginal Standing Facility (MSF) and bank rates to 5.75%.
Malhotra pointed out that inflationary pressures are expected to rise globally, prompting major central banks to tighten monetary policy. Tensions in West Asia and crude oil prices exceeding $100 per barrel are also impacting the global economic landscape.
The RBI believes that domestic demand, investment activities, and the growth of the services and manufacturing sectors will continue to bolster the Indian economy. However, vigilance regarding inflation, energy prices, and global economic conditions remains crucial.
India’s trade deficit increased to $58.7 billion in July and August, up from $55.1 billion during the same period last year, primarily due to imports of electronic goods and crude oil.
Malhotra noted that the first four months of this fiscal year saw a rise in foreign direct investment (FDI), reaching $13.8 billion compared to $9.6 billion last year.
Looking ahead, he stated that inflationary pressures on the supply side are likely to persist due to several factors, including a deficient southwest monsoon, El Niño conditions, and volatility in international oil prices. The Consumer Price Index (CPI) inflation is projected to average 5.2% this year, with quarterly estimates of 4.9%, 6%, and 5.7% respectively.
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