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Informist, Wednesday, Apr. 8, 2026

 

MUMBAI - Following are the highlights of Reserve Bank of India Governor Sanjay Malhotra's statement on Wednesday after the first bi-monthly meeting of the Monetary Policy Committee for 2026-27 (Apr-Mar):

 

KEY TAKEAWAYS

* MPC left repo rate unchanged at 5.25%
* MPC voted unanimously to leave repo rate unchanged at 5.25%
* MSF, Bank rates remain unchanged at 5.50%; SDF rate at 5.00%

* MPC decided to maintain 'neutral' policy stance
* Minutes of Apr MPC meeting to be released on Apr 22
 

MACROECONOMY

* India fundamentals exuded confidence before West Asia war
* India econ fundamentals on strong footing
* India fundamentals better now than in many previous crises

* Global econ facing unprecedented challenges
* Global growth faces downside risks on high oil prices
* Heightened uncertainty weighing on global econ outlook
* Commodity prices globally moderated, fincl mkts more volatile
* Noted geopoliticial uncertainty risen since last meeting

* MPC said data until Feb showed continued firm econ activity
* Data till Feb show strong econ activity momentum
* MPC said West Asia conflict to impede India growth
* Govt measures to mitigate adverse impact of West Asia war
* Fundamentals of India econ resilient
* Econ confronted with suppply shock, prudent to wait, watch
* Thought it prudent to wait and watch, assess balance of risks
* Neutral stance gives flexibility to act judiciously ahead
* Disruption in energy mkts may hurt industry, agri, svcs
* Heightened uncertainty could impact domestic liquidity
* Heightened uncertainty could impact domestic consumption
* Weaker global growth prospects can hit remittance flows
* Heightened uncertainty could impact domestic investment
* Govt has been proactive to minimise supply chain disruption

* Initial supply shock can change to demand shock in medium term
* Overall supply shock can become a demand shock over time

* Healthy balance sheets, svcs sector growth to support econ

* GST cuts should continue to support econ activity
* Business expectations remain optimistic
* Leading indicators show resilience in mfg, svcs sectors
* Agri sector prospects supported by healthy reservoir levels
* Rural demand remains robust, discretionary spending firm
* Pvt consumption to be supported by spending, rural demand
* Urban consumption to improve further, aided by GST cuts
* Govt thrust on infra spending continues
* Revival in pvt invest to sustain
* Remain vigilant of evolving global situation
* To put in place policies for best interest of econ
 

INFLATION

* Projects FY27 CPI inflation at 4.6%
* Retains Apr-Jun CPI inflation forecast at 4.0%
* Revises Jul-Sept CPI inflation to 4.4% from 4.2?rlier

* Projects Oct-Dec CPI inflation at 5.2%
* Projects Jan-Mar CPI inflation at 4.7%
* Projects FY27 core CPI inflation at 4.4%
* Will give core CPI inflation forecasts in the future
* Risks to inflation forecasts are to the upside

* MPC members say headline CPI contained, below target

* Underlying price pressures benign in recent months
* Recent spike in energy prices a risk to inflation
* Higher global energy prices passed through in some fuel items
* Likely El-nino conditions can pose risk to inflation
* Shortage of inputs have stoked inflation fears

* Core inflation pressures remain muted
* MPC members see upside risks to headline CPI have increased
* Upside risks to inflation outlook on high energy prices
* Risks make future inflation trajectory uncertain
* High crude prices can increase inflation, widen CAD
 

GROWTH

* Projects FY27 GDP growth at 6.9%
* Revises Apr-Jun GDP growth estimate to 6.8% from 6.9?rlier
* Projects Oct-Dec GDP growth at 7%
* Projects Jan-Mar GDP growth at 7.2%
* Revises Jul-Sept FY27 GDP growth to 6.7% from 7.0?rlier

* High energy price, supply shocks to impact growth FY27
* High commodity prices to impact growth this year
* Supply chain disruption can hit some key sectors, hurt growth
* Govt focus on domestic mfg augurs well for India's growth

* Risks to growth forecasts are tilted to downside
* Weather related events, global uncertainty weigh on growth
* W Asia conflict, monsoon uncertainty to weigh on growth

EXTERNAL SECTOR

* Exports can be impacted by disruptions to key shipping routes
* Exports may benefit from recent trade agreements
* Goods exports can be hit by lower global demand
* Services exports expected to be resilient
* Svcs exports, inward reciepts to keep CAD moderate
* CAD to be moderate FY26 due to svcs exports, remittances Q4
* See upside risks to India CAD in FY27
* India to integrate into global value chains post trade pacts
* India remains attractive destination for greenfield FDI
* Apr 3 FX reserves $697.1 bln
* India FX reserves adequate
* FX reserves adequate, cover 11-months import
* FX reserves adequate in terms of external debt
* India external sector indicators remain favourable
 

FINANCIAL SECTOR

* Exchange rate policy remains unchanged
* Don't target any particular level for exchange rate
* Intervention in FX market aimed at smoothening volatility
* FX intervention targets undue volatility
* Aim is to contain excessive volatility in exchange rate
* To continue to contain excessive, disruptive rupee volatility
* System liquidity avg daily surplus INR 2.3 tln since last MPC
* G-sec ylds largely range-bound, rose in Mar due to conflict
* To ensure self-fulfilling expectations on rupee do not come true
* Transmission in credit mkts remains satisfactory
* To be proactive, pre-emptive in liquidity mgmt
* Will ensure sufficient liquidity to meet product needs of econ
* System level parameters of banks, NBFCs sound
* Banks credit growth maintained upward trajectory
* Credit from all sources grew 14.3% YoY
* Bank credit growth remained broad-based
* Comprehensively reviewed extant norms on banks
* To revise, rationalise matters related to banks' boards
* To consolidate supervisory instructions into smaller list

* Propose to ease some onboarding norms for MSMEs
* To dispense with need of maitaining invest fluctuation buffer
* To allow some more non-bk entities in term money mkt
* To enhance standalone PD borrowing limits in term money mkt
 

End

 

Compiled by Vinod Bhovad

Filed by Vandana Hingorani

 

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