MUMBAI: The Reserve Bank of India (RBI) on Wednesday revised its growth outlook for the current fiscal year, raising the GDP projection to 6.8 per cent while lowering the inflation forecast to 2.6 per cent. The revisions reflect an above-average monsoon and the rationalisation of Goods and Services Tax (GST) rates.
In its August projections, the RBI had estimated GDP growth at 6.5 per cent for 2025-26, with inflation at 3.1 per cent.
Announcing the bi-monthly monetary policy, RBI Governor Sanjay Malhotra highlighted that key domestic developments, coupled with shifts in the global economic environment, have reshaped India’s growth-inflation dynamics.
“Buoyed by a favourable monsoon, the Indian economy continues to show resilience, recording stronger growth in Q1 of 2025-26. At the same time, headline inflation has moderated significantly,” he said.
On GST rationalisation, Malhotra noted that it is expected to temper inflation while supporting consumption and overall economic growth. However, he added that US tariffs could constrain export growth.
“Considering these factors, real GDP growth for 2025-26 is now projected at 6.8 per cent, with quarterly estimates of 7.0 per cent for Q2, 6.4 per cent for Q3, and 6.2 per cent for Q4,” he said, adding that GDP growth for Q1 of 2026-27 is projected at 6.4 per cent.
The Governor also pointed out that inflation has remained subdued so far in 2025-26, with actual outcomes significantly below earlier projections. He attributed the low inflation primarily to a sharp decline in food prices, supported by improved supply conditions and government measures to ensure smooth supply chain management.
Core inflation remained largely stable, with August’s reading at 4.2 per cent despite ongoing pressures on precious metals prices.
“CPI inflation for 2025-26 is now projected at 2.6 per cent, with quarterly estimates of 1.8 per cent for Q2, 1.8 per cent for Q3, and 4.0 per cent for Q4,” Malhotra said, adding that CPI inflation for Q1 of 2026-27 is projected at 4.5 per cent.
