The Reserve Bank of India (RBI) has raised its growth forecasts for the current fiscal year to 6.8 percent, attributing this adjustment to an above-normal monsoon and the rationalization of GST rates. Previously, in August, the RBI had estimated a GDP growth rate of 6.5 percent for 2025-26, alongside an inflation prediction of 3.1 percent. During the announcement of the bi-monthly monetary policy, RBI Governor Sanjay Malhotra remarked that significant developments within the domestic economy, set against a rapidly evolving global economic backdrop, have shifted the growth-inflation narrative in India.
He noted, “Supported by favorable monsoon conditions, the Indian economy is showing resilience, achieving higher growth in Q1 2025-26, while headline inflation has notably moderated.” Regarding the GST rate adjustments, he mentioned that these changes are expected to positively influence inflation, while also promoting consumption and growth. However, he cautioned that US tariffs could dampen export levels. Considering all these factors, the real GDP growth for 2025-26 is now projected to be 6.8 percent, with quarterly estimates of 7.0 percent for Q2, 6.4 percent for Q3, and 6.2 percent for Q4. Additionally, the GDP growth for the first quarter of 2026-27 is anticipated to be 6.4 percent.