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RBI Raises FY27 GDP Growth Forecast to 7.1% Despite Headwinds
The Reserve Bank of India expects India's economy to grow by 7.1% in the 2026-27 financial year.
That is 0.4 percentage points higher than its earlier forecast.
The RBI says the economy grew by 7.8% in the first quarter, helped by people spending and businesses investing.
Recent signs show factories and services are still growing, but more slowly than before.
Exports of goods and services also increased in July and August.
The RBI warned that tensions around the world, trade difficulties and supply problems could make growth harder.
A weak monsoon and strong El Niño conditions could also affect farming and spending in rural areas.
RBI Governor Sanjay Malhotra raised the FY2026-27 real GDP growth forecast by 40 basis points to 7.1%.
The RBI projected growth of 7.2% in Q2, 6.9% in Q3 and 6.8% in Q4.
India recorded 7.8% growth in Q1, supported by resilient private consumption and investment that increased almost 12%.
Manufacturing and services remained in expansion in Q2, while their pace of growth slowed from Q1.
Global uncertainty, supply disruptions, a weak monsoon and strong El Niño conditions were identified as risks to activity and rural demand.
- Who
- The Reserve Bank of India and Governor Sanjay Malhotra.
- What
- The RBI raised its FY2026-27 real GDP growth forecast by 40 basis points to 7.1%.
- Where
- India.
- When
- Wednesday; the forecast is for financial year 2026-27.
- Why
- The RBI cited strong economic activity, while warning that global headwinds and weather risks could weigh on growth.
Reasons for stronger growth
Risks to the outlook
Economic momentum
Reasons for stronger growth
The RBI raised its forecast, citing resilient activity, Q1 growth of 7.8%, strong investment and broad-based services activity.
Risks to the outlook
The RBI said Q2 indicators showed some moderation, with slower expansion in manufacturing and services and weakness in non-durable goods and domestic air passenger traffic.
External and weather risks
Reasons for stronger growth
Merchandise and services exports grew in July and August, while domestic demand and investment remained supportive.
Risks to the outlook
Geopolitical tensions, high commodity prices, trade frictions, tighter global financial conditions and supply disruptions could weigh on activity; monsoon and El Niño conditions could affect rural demand.
Key facts
- FY2026-27 GDP forecast
- 7.1%, raised by 40 basis points
- Q1 real GDP growth
- 7.8%
- Q2 growth projection
- 7.2%
- Q3 growth projection
- 6.9%
- Q4 growth projection
- 6.8%
- Investment in Q1
- Strong investment activity recorded an almost 12% increase
- Identified risks
- Global uncertainty, supply-chain disruptions, a weak southwest monsoon and strong El Niño conditions
Quotes
Sanjay Malhotra
Governor of the Reserve Bank of India
“Taking all these factors into consideration, real GDP growth for this year is projected at 7.1 percent, with Q2 at 7.2 percent, Q3 at 6.9, and Q4 at 6.8 percent.”
republicworld.com
“We exhibited resilience amidst global headwinds, as evident from real GDP growth of 7.8 per cent in Q1.”
republicworld.com
Sources
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