RBI Raises FY27 GDP Growth Forecast by 40 Bps to 7.1%

Mumbai: The Reserve Bank on Wednesday raised its GDP growth forecast for the current fiscal year by 40 basis points to 7.1 per cent, while cautioning that lingering global geopolitical tensions could pose a risk to the economic outlook.

Unveiling the October bi-monthly monetary policy, Governor Sanjay Malhotra said domestic economic activity exhibited resilience amidst global headwinds, as evident from real GDP growth of 7.8 per cent in Q1 2026-27.

Growth was driven by resilient private consumption and strong investment activity, while the contribution of net exports also remained positive.

He further said global headwinds from protracted geopolitical tensions, elevated international commodity prices, additional frictions in global trade and tightening global financial conditions may weigh on the growth outlook.

“Taking all these factors into consideration, real GDP growth for 2026-27 is projected at 7.1 per cent; Q2 at 7.2 per cent; Q3 at 6.9 per cent; and Q4 at 6.8 per cent,” Malhotra said.

The upward revision in the growth forecast by 40 bps further underscores the strength of economic activity despite significant headwinds, he added.

The central bank also said GDP growth for Q1:2027-28 is projected at 7.1 per cent and that the risks are evenly balanced.

Meanwhile, the World Bank has also raised India’s GDP growth forecast for the current fiscal year to 7.1 per cent, up 0.5 percentage points from its projections in April, supported by robust domestic demand and strong exports, despite global headwinds.

Last month, Asian Development Bank (ADB) and OECD and other global agencies like S&P and Fitch raised India’s FY27 GDP growth projection to around 7 per cent, boosted by robust June quarter economic activity and resilient domestic demand despite the West Asia conflict.

Paris-based Organisation for Economic Cooperation and Development (OECD) upped GDP growth forecast by 80 basis points to 7.1 per cent for FY27.

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