RBI raises GDP growth projection of Q1, Q2 of FY27

The Reserve Bank on Friday revised upwards GDP growth forecast for the first quarter of the next fiscal year to 6.9 per cent and 7 per cent for the subsequent three months on the back of trade deals, GST rationalisation, and robust farm output.

In December, the RBI had projected real GDP growth for the June quarter of 2026-27 at 6.7 per cent and 6.8 per cent for the July-September period.

Projections for the full year 2026-27 will be announced in the next monetary policy statement in April after taking into account the new GDP and CPI series with updated base year (2024=100).

"The Indian economy continues on a steadily improving trajectory, with real GDP poised to register significantly higher growth of 7.4 per cent in 2025-26, as compared to the previous year. Amidst global headwinds, private consumption and fixed investment supported growth," RBI Governor Sanjay Malhotra said while unveiling the monetary policy.

Going forward, he said economic activity is expected to hold up well in 2026-27.

Agricultural activity will be supported by healthy reservoir levels, robust rabi sowing, and improvement in crop vegetation conditions.

Further, improving corporate sector performance and sustained momentum in the informal sector should boost manufacturing activity, he said.

Also, construction sector growth is expected to remain firm and services sector should continue to be resilient, with strengthening domestic demand.

On the demand side, the momentum in private consumption is expected to sustain in 2026-27 while rural demand continues to be steady, the governor said.

The governor said recovery in urban consumption should further strengthen with continued support from GST rationalisation and monetary easing.

"High capacity utilisation, accelerating bank credit, conducive financial conditions, and the government's continued emphasis on infrastructure should give an impetus to investment activity," Malhotra said.

He further said the recently concluded India-EU free trade agreement (FTA) and the prospective India-US trade deal, along with several other trade agreements, will support exports over the medium-term.

Moreover, several measures announced in the Union Budget should also be conducive for growth.