RBI projects for FY26 GDP growth is at 6.7%; Inflation in FY25 remains at 4.8%

The Reserve Bank of India on Friday estimated the actual GDP growth for FY 25 at 6.4 percent, expecting economic activity in the second half, inspired by improvement in agriculture and manufacturing.

Announcing the result of the Monetary Policy Committee meeting, RBI Governor Sanjay Malhotra said that GDP growth is estimated at 6.7 percent, with Q1 FY26: 6.7 percent, Q2 FY26: 7.0 with Q1 FY26: 6.7 percent with quarterly estimates. Percent, Q3 FY26: 6.5 per cent and Q4 FY26: 6.5 percent.

On the inflation front, the Central Bank hopes that the Consumer Price Index (CPI) inflation will be reduced by 4.8 percent in FY25, Q4 FY25 is estimated to be 4.4 percent with inflation. For FY26, inflation is estimated at 4.2 percent, with quarterly estimates as Q1 FY26: 4.5 percent, Q2 FY26: 4.0 percent, Q3 FY26: 3.8 percent and Q4 FY26: 4.2 percent.

Malhotra, the governor of the recently held Monetary Policy Committee’s decisions, said that inflation has declined, which is supported by a favorable approach on food prices and continuous broadcasting of previous monetary policy works. It is expected to proceed in 2025–26, gradually align with the target.

Malhotra highlighted that food inflation is expected to be significantly softened with a favorable rabi crop that contributes to a favorable inflation approach under the pressure of inflation.

Despite the global economic uncertainties, India displays flexibility. However, Malhotra admitted that the economy could not remain immune for external pressures.

The index (PMI) of purchasing managers for construction indicates continuous flexibility, while the rural demand is increasing, even urban demand remains under control.

Major factors supporting development include tax relief measures in the Union Budget, improvement in agricultural production, strong business sentiments and continuous policy support from the government.

The RBI also plans to strengthen its economic forecast capabilities using Artificial Intelligence (AI) and will continue its flexible inflation targeting structure to maintain macroeconomic stability.

India’s foreign exchange reserves are strong, which exceeds USD 630 billion by January 31, 2025. It offers an import cover of over 10 months, offering strong external stability.

The RBI hopes that the current account deficit will remain within a permanent level for the financial year, ensuring a stable macroeconomic environment.

The latest rate cut comes after a long -term stringent cycle, where the RBI increased the repo rate from 4 percent to 6.5 percent to combat inflation between May 2022 and May 2023. The reduction indicates a change in the direction of supporting economic growth, ensuring value stability.

RBI is expected to stay within 4 percent target limit with inflation, and has been determined to improve economic activity, providing relief to borrowers and promoting consumption and investment in the coming months. is likely to.

The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) has decided to reduce the policy repo rate from 25 basis points (BPS), marking the first rate cut since May 2020.

The stance remains neutral, RBI Governor Sanjay Malhotra emphasized that inflation has been moderated and is expected to align further with the target in FY 26.