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Informist, Friday, Jun. 5, 2026

 

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--RBI revises FY27 GDP growth forecast to 6.6% from 6.9?rlier 
--RBI revises Apr-Jun GDP growth forecast to 6.6% from 6.8?rlier
--RBI revises Jul-Sept GDP growth forecast to 6.3% from 6.7?rlier
--RBI revises Oct-Dec GDP growth forecast to 6.5% from 7.0?rlier
--RBI revises Jan-Mar GDP growth forecast to 6.8% from 7.2?rlier
--RBI Malhotra: Risks to growth forecasts are tilted to the downside
--RBI Malhotra:Global econ shaped by disruptions to supply routes in past mos
--RBI Malhotra: Global econ shaped by heightened uncertainty past few months
--RBI Malhotra: Global econ outlook remains clouded
--RBI Malhotra: Global econ deteriorated since last policy meeting
--RBI Malhotra: GDP growth forecast cut, CPI forecast hiked since Apr
--RBI Malhotra: Noted considerable risk to inflation, growth assumptions
--RBI Malhotra:Noted elevated energy prices having adverse spillover on econ
--RBI Malhotra: To track if higher price levels embedded in econ
--RBI Malhotra: Domestic econ activity largely steady despite global shock
--RBI Malhotra:Data shows domestic econ activity largely steady since war began
--RBI Malhotra: Cost pressure becoming visible in econ activity
--RBI Malhotra: High enery prices, supply disruptions to weigh on econ
--RBI Malhotra: Econ at this point is relatively strong
--RBI Malhotra: Econ relatively strong at this point

 

NEW DELHI – The Reserve Bank of India Friday lowered its forecast for India's GDP growth in 2026-27 (Apr-Mar) by 30 basis point to 6.6%, reflecting the risks arising from the war in West Asia. The central bank revised downwards its growth forecast for all four quarters of FY27 by 20-50 bps. 

"Prolonged global supply chain disruptions, heightened volatility in global financial markets, and weather-related shocks continue to pose downside risks to the domestic growth outlook," RBI Governor Sanjay Malhotra said. "Elevated energy prices coupled with global supply constraints are having adverse spillovers on economic activity."

 

The RBI now projects 6.6% growth in the June quarter, 20 bps lower than the April foreacast of 6.8%. For the September quarter, the RBI sees growth at 6.3%, 40 bps lower than the 6.7% projected earlier. The RBI cut the growth projection for the December quarter by 50 bps to 6.5% and for the March quarter by 40 bps cut to 6.8%.

 

With growth seen lower than previously projected, and inflation seen higher, the RBI's Monetary Policy Committee Friday unanimously voted to leave the policy repo rate unchanged at 5.25%. The panel also decided to retain the "neutral" stance, even as risks to growth and inflation rose from the war in West Asia, Malhotra said. 

 

There are considerable risks to the baseline assessment of inflation and growth due to the uncertainty about the duration and intensity of the conflict, magnitude of its spillover effects, and the pace of restoration of supply chains, the RBI governor said. While import diversification in affected commodities is likely to improve supply, it would come at a higher cost, he added. 

 

"Going ahead, the rise in prices of energy and other inputs, coupled with supply disruptions, is likely to weigh on economic activity," Malhotra said. "The full impact, however, will depend on the duration of the conflict, time taken for normalisation of supply chains and the burden-sharing approach among the stakeholders."

 

Malhotra said the pass-through of higher energy prices to retail products is already evident, which, coupled with projected deficiency in the south-west monsoon, will hit agricultural production and rural demand.

 

For now, high frequency indicators suggest domestic economic activity has remained largely steady since the outbreak of the war, the governor said. India's manufacturing and services Purchasing Managers' Indices suggest that "both sectors continue to be resilient, and business expectations are still positive," he added. India's services sector activity rose to a six-month high at 59.8 in May and the manufacturing sector activity grew to 55.0 last month.

 

"While domestic demand remains resilient and manufacturing and services sectors activity continue to expand, there are incipient signs of moderation in some sectors as suggested by high frequency indicators," Malhotra said. Having said that, the Monetary Policy Committee will remain data-dependent and closely monitor developments, he added.

 

The global economy has been shaped by heightened uncertainty, disruptions to key trade routes, and supply chains over the past few months, Malhotra said. "Global environment has deteriorated since the last policy meeting with the conflict lingering amidst a fragile truce," he said. The economic outlook remains clouded by the continuing geopolitical impasse and without any meaningful resolution in the West Asia situation. 

 

However, India remained confident to withstand these shocks with minimum pain. "Indian economy has entered this episode of global turbulence with much better fundamentals than in previous similar episodes," Malhotra said. At the same time, it is important to address these challenges and take them as an opportunity to further enhance resilience, he added.

 

While the global economic conditions have adversely impacted the domestic growth-inflation outlook, Indian economy at this point is "relatively strong", Malhotra said. "We shall put in place policies to meet the challenges while taking measures to further strengthen the macroeconomic fundamentals of the country," he said.  End

 

Reported by Shweta

Edited by Deepshikha Bhardwaj

 

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