August 5: The Reserve Bank of India (RBI) on Wednesday revised its FY27 GDP growth forecast upward to 6.7% from 6.6%, reflecting confidence in the resilience of the Indian economy despite persistent global uncertainties. The growth upgrade came alongside the central bank’s decision to keep the benchmark repo rate unchanged at 5.25% during the August Monetary Policy Committee (MPC) meeting.
The RBI had lowered its growth estimate to 6.6% in its June policy review due to volatility in crude oil prices and geopolitical tensions. However, improved domestic demand, healthy credit growth, and robust economic activity prompted the central bank to raise its outlook for the current financial year.
West Asia Conflict Remains a Key Concern
While upgrading the growth forecast, the RBI cautioned that the ongoing conflict in West Asia continues to pose risks to India’s economic outlook. Rising geopolitical tensions could disrupt global supply chains, increase crude oil prices, and add pressure on inflation, potentially impacting growth if uncertainties persist.
Governor Sanjay Malhotra said the central bank remains watchful of global developments, including elevated energy prices, weather-related disruptions, and external financial market volatility, while maintaining a data-driven policy approach.
Domestic Economy Shows Resilience
The RBI cited resilient domestic consumption, strong services sector activity, infrastructure spending, and steady credit demand as key factors supporting India’s growth prospects. The central bank expects these fundamentals to help cushion the economy against external headwinds in the coming quarters.
Alongside the higher growth projection, the RBI also lowered its FY27 inflation forecast to 5.0% from 5.1%, indicating that recent inflationary pressures are largely supply-driven rather than broad-based. However, it acknowledged that food prices, fuel costs, and monsoon-related uncertainties will require close monitoring.
Policy Outlook
The Monetary Policy Committee unanimously voted to keep the repo rate unchanged at 5.25% while retaining its neutral stance. The RBI signaled that future policy decisions will remain dependent on incoming inflation and growth data, balancing price stability with support for economic expansion.
Key Highlights
- FY27 GDP growth forecast: Raised to 6.7% (from 6.6%)
- Repo rate: Unchanged at 5.25%
- FY27 inflation forecast: Lowered to 5.0%
- Key risk: West Asia conflict, crude oil prices, and monsoon uncertainty
- Growth drivers: Strong domestic demand, credit growth, services, and infrastructure spending
