RBI Adjusts FY27 GDP Growth Forecast to 7.1% on October 7
The Reserve Bank of India has revised its GDP growth forecast for FY27 to 7.1%, reflecting stronger domestic economic momentum.
GDP growth forecast for FY27 raised from 6.7% to 7.1%.
Q2FY27 growth estimate increased to 7.2%, Q3FY27 to 6.9%.
Repo rate raised to 5.50% amid concerns over inflation.
On October 7, the Reserve Bank of India (RBI) announced a significant revision in its GDP growth forecast for the financial year 2027, raising it to 7.1% from the previous estimate of 6.7%. This adjustment was revealed by RBI Governor Sanjay Malhotra, who also provided updated growth estimates for the second and third quarters of FY27.
The RBI's new projections indicate a growth rate of 7.2% for Q2FY27, up from 6.4%, and an increase for Q3FY27 to 6.9% from 6.5%. However, the forecast for Q4FY27 remains unchanged at 6.8%. In contrast, the growth estimate for Q1FY28 has been lowered to 7.1% from 7.3%, reflecting a cautious outlook for the immediate future.
Governor Malhotra highlighted that the domestic economic momentum is broad-based, with private consumption playing a crucial role in driving growth during the first quarter. He noted that while economic activity has maintained momentum in the second quarter, there has been a slight moderation compared to the first quarter. Manufacturing activity continues to show resilience despite facing cost pressures.
The upward revision of India's growth forecast comes amid a challenging global economic environment. Malhotra pointed out that global growth is expected to slow down this year compared to the previous year, influenced by factors such as the resurgence of conflict in West Asia, rising crude oil prices, and persistent trade uncertainties, which have contributed to a nervous global sentiment.
In conjunction with the revised growth forecasts, the RBI's Monetary Policy Committee (MPC) decided to raise the repo rate by 25 basis points to 5.50%, shifting its policy stance from neutral to calibrated tightening. The committee anticipates core inflation to average 4.4% for FY27, with consumer price inflation projected at 5.8% for the remaining quarters. Malhotra emphasized that rate cuts are not on the horizon in the near term, with future policy actions dependent on evolving economic conditions and inflation trends.
