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Informist, Wednesday, Apr. 8, 2026

NEW DELHI – The Reserve bank of India has assumed the rupee exchange rate at 94 per dollar and crude oil price at $85 per barrel in 2026-27 (Apr-Mar) for its growth and inflation projections, according to the half-yearly Monetary Policy Report released Wednesday. The RBI Wednesday also pojected India's GDP to grow 6.9% in FY27 with CPI inflation at 4.6%.   

"These baseline assumptions are subject to uncertainties emanating from the evolving global trade landscape, heightened tensions in West Asia, volatility in global financial markets, and domestic weather-related risks," the report said. The baseline projections in the report for rupee exchange rate and crude oil are significantly higher than 88 per dollar and $70 a barrel estimated, respectively, in the October edition of the report. 

The upward revision to exchange rate assumption and crude oil price comes after the rupee depreciated over 4% to as low as 94.83 a dollar and the price of Brent crude jumped as high as 62% to over $100 a barrel following joint military attack on Iran by the US and Israel on Feb. 28. Since the announcement of bilateral ceasefire late Tuesday, the price of crude oil has cooled to around $94 a barrel and the rupee has recovered to 92.56 a dollar.

For the next financial year, as per structural model, India's GDP is projected to grow 6.6% with CPI inflation at 4.6%, the report said, assuming the price of crude oil at $75 a barrel. In case price of crude oil is $10 a barrel higher than the assumption for each of the two financial years, India's GDP may grow 6.7% in FY27 and 6.4% in FY28, the report said. Similarly, CPI inflation may rise to 5% in the current year and 5.1% in the next financial year if crude price is $95 per barrel and $85 a barrel in the two years, respectively. 

The central bank projections have assumed the general government's fiscal deficit at 6.8% of GDP. For the central government, the fiscal deficit assumption is 4.3% of GDP, as estimated in the Budget for FY27. However, after the Budget, India's nominal GDP has undergone a downward revision following the base year revision. Now India's nominal GDP needs to grow 13.6%, instead of 10% assumed in the Budget, for the government to cut the fiscal deficit to 4.3% of GDP.  

The projections have also assumed global growth of 2.9% in 2026 and 3% in 2027. But if global growth turns out to be 100 basis points below the baseline, domestic growth and inflation could be lower by around 30 bps and 15 bps, respectively, the report said. "Conversely, if global growth is higher by 50 bps relative to the baseline, domestic growth and inflation could turn out to be higher by around 15 bps and 7 bps, respectively."

End

US$1 = INR 92.60

Reported by Krity Ambey

Edited by Akul Nishant Akhoury

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