RBI Projects India's GDP Growth at 6.7% Amid Global Challenges

India's Economic Outlook

New Delhi: The Reserve Bank of India (RBI) has identified India as the fastest-growing economy in the face of ongoing global uncertainties. On Wednesday, the RBI revised its forecast for real GDP growth to 6.7% for FY27, an increase of 10 basis points from the earlier estimate of 6.6% made during the previous Monetary Policy Committee (MPC) meeting.

During his speech, RBI Governor Sanjay Malhotra outlined the expected GDP growth rates for the upcoming quarters: 7% for Q1 FY27, 6.4% for Q2, 6.5% for Q3, and 6.8% for Q4.

Malhotra noted that supply-side pressures stemming from the conflict in West Asia have somewhat diminished since June 2026. However, the resurgence of conflict in early July has led to increased volatility in energy prices and renewed concerns regarding supply chains.

Despite the ongoing global uncertainties, domestic economic activity has shown resilience, as indicated by high-frequency indicators for Q1. Preliminary corporate results for the first quarter also suggest a strong performance in the manufacturing sector, according to Malhotra.

He projected that headline inflation is likely to rise, mainly due to supply-side pressures related to food and fuel, while core inflation is expected to remain moderate and decline after reaching its peak in Q3.

Malhotra expressed that the economic outlook remains uncertain due to factors such as the Southwest monsoon, El Nino, geopolitical tensions, and global trade policies. He emphasized the need for clearer insights into the inflation trajectory and its components before any policy decisions are made.

He further mentioned that underlying inflation, as indicated by core inflation excluding precious metals, has remained stable for a considerable period and is anticipated to align with core inflation by the end of the financial year.

Regarding growth, Malhotra stated that the economy is bolstered by strong domestic demand, ongoing expansion in manufacturing and services, and robust export activity.