More Stories

Informist, Saturday, Aug. 1, 2026

 

NEW DELHI – The Reserve Bank of India is likely to keep the repo rate unchanged at its upcoming Monetary Policy Committee meeting in August, even as the GDP growth for Apr-Jun is expected to exceed 7%, according to a pre-policy report by SBI Research. The RBI will announce its monetary policy decision on Wednesday, following a three-day meeting. Over the last three policies, the RBI had lowered its Apr-Jun GDP growth projection to 6.6% from 6.9% citing the war in West Asia. However, economists at SBI Research believe the situation has changed and that the Apr-Jun growth print could be much better than anticipated. "Our preliminary estimate indicates that Apr-Jun GDP may clock around 7.0% growth%," SBI Research said. 

 

"Volatility and insecurity on account of commodities, energy and associated products disruption through supply or value chains is nudging nations to resort to a plethora of fiscal measures, that in turn should warrant more borrowing plans and keep key rates elevated," the report said. 

 

SBI Research said in its report that the current inflation trajectory indicates inflation could exceed 5% over the next two quarters with 2026-27 (Apr-Mar) projection currently at 5%, which remains well below the RBI's target range. The report also said imported inflation was benign till April, as the impact of higher global oil prices had not been passed on to Indian consumers through petrol and diesel prices. "The MPC may keep rates unchanged...but current backdrop has made soft language costlier," the research report said. 

 

In its report, SBI Research estimated total capital inflows of around $35 billion by the end of July. Of this, it expects $28 billion-$30 billion to come from foreign currency non-resident bank deposits. Overseas foreign currency borrowings by banks and external commercial borrowings by public sector entities were pegged at $5 billion-$7 billion by July end.

 

"FCNR(B) deposit numbers are captured by RBI and become a part of foreign currency assets with a clear lag (we believe as large as 10 days), with the assumption that a large part of foreign exchange reserves is being recouped and adding to RBI foreign exchange coffers...and hence there is no concomitant increase in FX reserves (or basically in foreign currency assets) and FCNR (B) inflows," the research report said. "So far (till Jul. 24), foreign currency assets has increased by $12.5 billion (since Jun. 8)"

 

On the currency front, the rupee has depreciated 11.26% since Apr. 1, 2025. The brief recovery in June reversed amid the escalation in the US-Iran conflict and related uncertainties. With the deferral of India's inclusion in the Bloomberg Global Aggregate Index, it is imperative that the rupee is not allowed to weaken endlessly on the back of self-fulfilling expectations, especially after the window for FCNR(B) deposits closes on Sept. 30, 2026, the report said.

 

"Rupee bore most of the burnt in March (as against select emerging market peers like Brazilian Real or Indonesian Rupiah that fell gradually) when a strengthening dollar index swept all currency pairs during early days of conflict, though it recouped some grounds in later months... Rupee must draw solace from a kitty swelling by influx of FCNR(B) and other resources," the report said.

 

The report further highlighted that despite a sluggish start and a near-40% rainfall deficit in June 2026, surplus showers in July narrowed the nationwide shortfall to around 13%. Except for a few foodgrain-producing states such as Bihar and Andhra Pradesh, all other states received excellent rainfall in July. The IMD has forecast below-normal rainfall across the country during the second half of the Southwest monsoon season. "Kharif sowing, so far, is only 4.7% lower than the 2025 levels indicating better harvest and subsequently minimal or no impact on food inflation going forward," the research report said. "However, a late El Nino may impact the Rabi crops."

 

On systemic liquidity, SBI Research said the system is currently in surplus at INR 1.3 trillion, with core liquidity at INR 4.99 trillion. It expects surplus core liquidity to reach INR 9 trillion by the end of September. End

 

US$1 = INR 95.38

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Vaishali Tyagi

Edited by Deepshikha Bhardwaj

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.