India's GDP Growth Forecast: What to Expect Amid Global Challenges

The Reserve Bank of India has projected a GDP growth of 6.9% for the current fiscal year, down from 7.6% for 2025-26. This forecast reflects concerns over high commodity prices and supply chain disruptions due to the West Asia crisis. Despite these challenges, the services sector and domestic manufacturing are expected to support growth. The RBI's Governor, Sanjay Malhotra, outlined the potential impacts of global financial volatility and emphasized the government's focus on enhancing domestic manufacturing. Explore the detailed projections for quarterly growth and the implications of ongoing global conflicts on India's economy.

By Narendra Chaudhary Apr 8, 2026, 12:00 IST

Economic Outlook for India

Mumbai: The Reserve Bank of India has revised its GDP growth forecast for the current fiscal year to 6.9%, a decrease from the 7.6% projected for 2025-26. This adjustment is largely attributed to ongoing concerns regarding high commodity prices and supply chain issues stemming from the crisis in West Asia.

During the announcement of the first bi-monthly monetary policy for 2026-27, RBI Governor Sanjay Malhotra noted that disruptions in vital shipping routes could negatively affect merchandise exports, leading to increased freight and insurance costs.

Conversely, he highlighted that the services sector continues to show strong growth, alongside the positive effects of GST rationalization, increased capacity utilization in manufacturing, and robust financial health among corporations and financial institutions, which should bolster domestic demand.

According to the Second Advance Estimates (SAE) of the new GDP series (base year 2022-23), India's real GDP is expected to grow by 7.6% year-on-year in 2025-26.

Malhotra pointed out that high energy and commodity prices, combined with supply shocks from the Strait of Hormuz disruptions, will hinder domestic production in 2026-27.

"Increased volatility in global financial markets, affecting domestic financial conditions, will also impact growth prospects," he stated.

He added that the government's commitment to enhancing domestic manufacturing in strategic sectors, as outlined in the Union Budget for 2026-27, is promising for India's future growth trajectory.

"Considering all these factors, we project real GDP growth for 2026-27 at 6.9%, with quarterly estimates of 6.8% for Q1, 6.7% for Q2, 7.0% for Q3, and 7.2% for Q4," Malhotra concluded.

He emphasized that the ongoing conflict in West Asia has severely disrupted global supply chains, presenting an unprecedented challenge for the global economy, characterized by rising prices and declining global growth.