RBI Policy
GDP, CPI forecasts assume 86/$1 as rupee's exchange rate in FY26
This story was originally published at 13:58 IST on 9 April 2025
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--RBI: GDP, CPI forecasts assume $70/bbl as India's crude oil basket price
--RBI: FY27 CPI inflation seen at 4.3% per structural model estimates
--RBI: FY27 GDP growth seen at 6.7% per structural model estimates
--RBI:Jan-Mar 2027 CPI inflation seen at 4.3% per structural model estimates
--RBI: FY27 quarterly GDP growth rates seen in 6.4-6.8% range per model
--RBI: GDP, CPI forecasts assume 86/$1 as rupee's exchange rate in FY26
--RBI: GDP, CPI forecasts assume 3.1% global growth in 2025, 3.0% in 2026
--RBI: Forecasts assume India FY26 general govt fisc gap within 7.1% of GDP
--RBI:Forecasts assume no major change in India's macro, structural policies
--RBI: Global growth 100 bps under baseline could hit India growth by 30 bps
--RBI: Global growth 100 bps under baseline could lower India CPI by 15 bps
--RBI: Global growth 50 bps above baseline could raise India growth by 15 bps
--RBI: Global growth 50 bps above baseline could raise India CPI by 7 bps
--RBI: Crude oil price 10?low baseline could lower India CPI by 30 bps
--RBI: Crude oil price 10?low baseline could boost India growth by 15 bps
--RBI: Crude oil price 10?ove baseline could raise India CPI by 30 bps
--RBI: Crude oil price 10?ove baseline could hurt India growth by 15 bps
--RBI: Rupee 5% weaker than baseline could push up CPI inflation by 35 bps
--RBI: Rupee 5% weaker than baseline could boost GDP growth by 25 bps
--RBI: Rupee 5% stronger than baseline could lower CPI inflation by 35 bps
--RBI: Rupee 5% stronger than baseline could lower GDP growth by 25 bps
NEW DELHI – The Reserve Bank of India has assumed the rupee at 86 per dollar for 2025-26 (Apr-Mar) for its growth and inflation projections, higher than the assumption of 83.50 a dollar taken during the second half of FY25, the central bank said in the April edition of its half-yearly Monetary Policy Report, released Wednesday.
The RBI also lowered its assumption for the price of India's crude oil basket to $70 a barrel for FY26 projections, as compared to the earlier assumption of $80 a barrel taken for Oct-Mar.
"These baseline assumptions are, however, subject to uncertainties emanating from reciprocal and retaliatory tariffs owing to protectionist trade policies adopted by major economies, prolonged geopolitical conflicts, volatility in global financial and commodity markets and possibility of adverse climate events," the report said. "
The RBI lowered its GDP growth forecast for FY26 by 20 basis points to 6.5%. The central bank also lowered the inflation forecast to 4.0% for FY26 from 4.2?rlier. In the Monetary Policy Report, the RBI said GDP growth is seen at 6.7% in FY27 as per structural model estimates, while CPI inflation is projected at 4.3%.
The higher exchange rate assumption comes on the back of a sharp decline in the rupee since October. The rupee has depreciated 3.3% against the dollar since end September.
Similarly, the assumption for crude oil prices has come down because of a fall in the commodity's prices. Brent crude oil prices have been declining in recent weeks, and fell to $60 per barrel on Wednesday due to concerns over demand amid an escalating trade war between the US and China.
The RBI's projections have assumed general government fiscal deficit staying within 7.1% of GDP in FY26. The forecasts assume no major change in India's macroeconomic or structural policies, the RBI report said.
"Global economic outlook is also subject to headwinds from fiscal sustainability concerns, occurrence of extreme weather events and technological disruptions," the report said. "If some of these scenarios materialise, and if global growth turns out to be 100 bps lower than assumed in the baseline, domestic growth and inflation could be lower by around 30 bps and 15 bps, respectively, in comparison with the baseline projections."
If global growth is 50 bps above the baseline, India's growth could rise by 15 bps, while inflation could increase by 7 bps, the report said.
If crude oil prices fall 10% from the baseline assumption, India's CPI inflation could come down by 30 bps, and growth could rise 15 bps. If crude oil price rise 10% from the baseline, inflation in India could rise by 30 bps, while growth could fall by 15 bps, the report said.
Similarly, rupee 5% weaker than baseline could push up CPI inflation by 35 bps and boost GDP growth by 25 bps. If rupee is 5% stronger than baseline, CPI inflation could come down by 35 bps, while GDP growth could be hit by 25 bps.
| Indicator | October 2024 | April 2025 |
| Crude Oil (Indian basket | $80 per barrel during Oct-Mar | $70 per barrel during FY26 |
| Exchange rate | 83.5 a dollar during Oct-Mar | 86 a dollar during FY26 |
| Monsoon | Normal for FY26 | Normal for FY26 |
| Global growth | 3.2% in 2024, 3.3% in 2025 | 3.1% in 2025, 3.0% in 2026 |
| Fiscal deficit (per cent of GDP) |
To remain within Budget Estimate FY25 Centre: 4.9 Combined: 7.3 |
To remain within Budget Estimate FY26 Centre: 4.4 |
| Domestic macroeconomic/ structural policies during the forecast period | No major change | No major change |
End
US$1 = INR 86.53
Reported by Shubham Rana
Edited by Vandana Hingorani
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