RBI GDP growth 2025: Central bank keeps FY26 forecast unchanged at 6.5%, projects 6.6% for FY27

The Reserve Bank of India’s Monetary Policy Committee (MPC) on Wednesday kept its FY2025–26 GDP growth forecast unchanged at 6.5%, holding to its earlier stance despite fresh uncertainty stemming from US President Donald Trump’s sweeping import tariffs. For FY2026–27, the central bank projects growth at 6.6%.

Quarterly GDP growth for FY26 is projected at 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4. “The risks are evenly balanced,” RBI Governor Sanjay Malhotra said.

The MPC lowered its inflation forecast for FY26 to 3.1%, from 3.7% in June, citing softening food prices and improving supply conditions. However, it expects inflation to rise to 4.9% in FY27–above its 4% target–due to a likely uptick in food prices and external shocks.


The central bank left the repo rate unchanged at 5.5%, after cutting it by 100 basis points since February. With core inflation hovering around 4% and headline CPI below that level for five straight months, the RBI signalled confidence in price stability for now.

The MPC noted that the global environment remains challenging. "Although financial market volatility and geopolitical uncertainties have abated somewhat from their peaks in recent months, trade negotiation challenges continue to linger. Global growth, though revised upwards by the IMF, remains muted. The pace of disinflation is slowing down, with some advanced economies even witnessing an uptick in inflation," it said.

Malhotra said rural consumption remains resilient and services sector activity is expected to stay buoyant. Growth, the RBI said, continues to be supported by strong rural demand, rising private consumption, and steady public capital expenditure. A normal southwest monsoon has aided kharif sowing and replenished reservoir levels, while construction and services remain strong.

But the central bank flagged continued weakness in the industrial sector, especially in electricity and mining. “Growth in the industrial sector remained subdued and uneven across segments, pulled down by electricity and mining,” it said.

The three-day MPC meeting, which began Monday, took place against the backdrop of renewed global trade tensions after Washington announced a 25% import duty on Indian goods effective August 7. The RBI warned that such external headwinds–along with prolonged geopolitical risks and volatility in global financial markets–pose a threat to India’s growth outlook.

The RBI’s July Bulletin noted that the economy remained resilient through June and July, with improving prospects for the kharif crop, continued strength in services, and modest industrial growth. System liquidity stayed in surplus, aiding credit transmission.

The Bulletin also flagged a key risk: a 10% rise in global crude oil prices could push up headline inflation by 20 basis points. It underscored the importance of reducing import dependence and shifting toward alternative fuels to stabilise prices in the long run.