RBI Monetary Policy 2025 on GDP: FY 2025-26 GDP growth forecast revised to 7.3%, up from 6.8%

India's GDP growth forecast for 2025-26 has been revised upward. Reserve Bank of India (RBI) Governor Sanjay Malhotra announced a new projection of 7.3%, compared to the earlier estimate of 6.8%, during his Monetary Policy Committee (MPC) address on Friday. This adjustment reflects an improvement of half a percent in the outlook.

Malhotra explained that the Indian economy's performance has exceeded expectations, prompting the RBI to raise its growth projections. The updated forecast for the current year is as follows:

• Q3 GDP at 7%

• Q4 GDP at 6.5%

For the next fiscal year (2026), the RBI anticipates:

• Q1 2026 at 6.7%

• Q2 2026 at 6.8%

Despite these positive revisions, the RBI maintains that risks to the projections are evenly balanced, indicating a steady growth outlook.

This upward revision follows India's better-than-expected performance in Q2 2025-26. The economy grew at 8.2% for July-September, surpassing the RBI's earlier projection of 6.8%, marking the fastest growth in the last six quarters. Nominal GDP also grew by 8.7% in Q2, slightly down from 8.8% the previous year.

In addition to the revised growth forecast, the RBI's Monetary Policy Committee reduced the repo rate by 25 basis points, bringing it down to 5.25% from 5.5%. This adjustment aligns with the RBI's neutral policy stance, maintaining a cautious approach amid steady inflation and moderated growth.