Mumbai, April 8
The Reserve Bank on Wednesday projected India’s GDP growth at 6.9 percent for the current fiscal year, attributing the decrease from the 7.6 percent forecast for 2025-26 primarily to surging commodity prices and supply chain disruptions from the West Asia crisis.
Presenting the first bi-monthly monetary policy for 2026-27, RBI Governor Sanjay Malhotra underscored that rising freight and insurance costs, resulting from ongoing disruptions in key shipping routes, pose key risks, including delays in delivery, increased transaction costs, and possible reduction in competitiveness, which may hamper merchandise exports.
Domestic demand should remain supported by strong services momentum and the continuing effects of GST rationalization. Higher manufacturing capacity utilization and robust balance sheets will also help.
According to the Second Advance Estimates (SAE) of the new GDP series (base year 2022-23), analysts estimate India’s real GDP will grow by 7.6 percent year-on-year during 2025-26.
The Governor said higher energy and commodity prices will slow domestic production in 2026-27. He also cited supply shocks in the Strait of Hormuz as key risks contributing to this slowdown.
“Heightened volatility in global financial markets, particularly in equities and currencies, will spill over into domestic financial conditions. This increased uncertainty and tighter lending could weigh on growth prospects,” Malhotra said.
He said the government’s focus on scaling up domestic manufacturing across several strategic and frontier sectors, announced in the Union Budget 2026-27, bodes well for India’s growth trajectory.
Considering these factors, Malhotra projected real GDP growth for 2026-27 at 6.9 percent, expecting 6.8 percent in Q1, 6.7 percent in Q2, 7.0 percent in Q3, and 7.2 percent in Q4.
He emphasized that the conflict in West Asia has severely disrupted global supply chains. This has driven up prices and slowed global growth.
