THEBUSINESSBYTES BUREAU

NEW DELHI, AUGUST 5, 2026

The Reserve Bank of India (RBI) on Wednesday raised its real GDP growth forecast for FY2026-27 to 6.7 per cent from the earlier estimate of 6.6 per cent, citing resilient domestic economic activity and reaffirming that India remains the world's fastest-growing major economy despite persistent global uncertainties.

Announcing the Monetary Policy Committee's (MPC) decision, RBI Governor Sanjay Malhotra said the economy continues to display resilience, supported by strong domestic demand, sustained expansion in the manufacturing and services sectors, and robust export performance.

The six-member MPC kept the policy repo rate unchanged at 5.25 per cent and retained its neutral policy stance, taking into account uncertainties arising from global trade tensions and geopolitical developments.

The central bank projected GDP growth at 7 per cent in the first quarter of FY27, 6.4 per cent in the second quarter, 6.5 per cent in the third quarter and 6.8 per cent in the fourth quarter.

Malhotra said high-frequency economic indicators for the first quarter, coupled with early corporate earnings, suggest healthy momentum in the manufacturing sector, reinforcing confidence in the economy's growth trajectory.

On the inflation front, the RBI Governor said headline inflation is expected to edge up due to supply-side pressures from food and fuel prices, while core inflation is likely to remain moderate and ease after peaking in the third quarter.

He said the inflation outlook continues to be clouded by uncertainties, including the progress of the southwest monsoon, the possibility of El Niño conditions, geopolitical developments and changes in global trade policy. Greater clarity on the inflation trajectory and its composition would be required before any further monetary policy action, he added.

Referring to the global economic environment, Malhotra said supply-side pressures stemming from the West Asia conflict had eased after June, but renewed escalation since early July has heightened volatility in energy prices and revived concerns over disruptions to global supply chains.

He also noted that underlying inflation, measured by core inflation excluding precious metals, has remained benign and is expected to gradually converge with overall core inflation by the end of the financial year.

The upward revision in the growth forecast reflects the RBI's assessment that India's domestic economic fundamentals remain robust even as external risks continue to pose challenges to growth and inflation.