RBI MPC: Gov Malhotra hikes GDP growth projection to 7.1% this year

RBI MPC announcements: Reserve Bank of India Governor Sanjay Malhotra, during the Monetary Policy Committee's latest announcements, projected India’s real GDP growth rate for this year at 7.1 per cent, which is 40 bps higher that the previous projection of 6.7 per cent in August.

Governor Malhotra projected the GDP growth as follows:

Q2: 7.2 per cent from 6.3 per cent 
Q3: 6.9 per cent from 6.5 per cent
Q4: 6.8 per cent unchanged from 6.8 per cent

The Indian economy remains strong, said Governor Malhotra. Domestic economic activity exhibited resilience, he said. Economic activity is holding momentum in Q2. Monsoon has been marginally lower, manufacturing activity is holding well, service activity is steady, private consumption was resilient, and fixed investments remained strong, he said. Strong El Nino may impact the upcoming Rabi season, he added.

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This comes after Moody’s Ratings raised its real GDP growth forecast for 2026-27 to 7% from 6%, while the World Bank increased its FY27 forecast to 7.1% from 6.6%. Both agencies flagged risks related to the West Asia conflict, energy prices, inflation, monsoon conditions, and global uncertainty.

Moody’s revised its growth forecast due to the economy’s resilience to the West Asia conflict. It cited stronger private consumption, robust gross fixed capital formation, continued public infrastructure spending, signs of private investment revival, and sustained strength in the services sector.

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The World Bank raised its FY27 growth forecast to 7.1%, citing better-than-expected economic performance despite trade and geopolitical uncertainties. This was a sharp revision from its April estimate of 6.6%, made amid the West Asia crisis. The World Bank expects growth to pick up and remain above 7% in the medium term as external headwinds ease.