RBI pegs real GDP growth at 6.6 pc for FY27, inflation at 5.1 pc amid global disruptions

The Reserve Bank of India (RBI) on Friday projected real GDP growth for 2026-27 at 6.6 per cent -- with Q1 at 6.6 per cent; Q2 at 6.3 per cent; Q3 at 6.5 per cent; and Q4 at 6.8 per cent -- saying that prolonged global supply chain disruptions, volatility in global financial markets, and weather-related shocks continue to pose downside risks to the domestic growth outlook. 

India’s manufacturing and services PMI suggest that both sectors continue to be resilient, and business expectations are still positive, said RBI Governor Sanjay Malhotra after the three-day MPC meeting.

“On the demand side, private consumption, aided by discretionary spending, has remained resilient so far. Fixed investment has also maintained its momentum despite cost pressures. Merchandise exports recorded strong growth in April 2026, notwithstanding elevated freight and insurance costs,” he noted. 

Services exports are also holding up well, reflecting sustained demand despite concerns about AI. 

“Overall, the economic situation has broadly exhibited resilience and withstood the conflict spillovers, although the impact of cost pressures is becoming visible,” Malhotra mentioned during his speech.

He further stated that CPI inflation remains below the target despite global shock as the passthrough to domestic prices has been limited. 

“While the baseline projections point towards headline inflation firming up towards the upper tolerance level in Q3 2026-27, the impact of the supply shock is expected to wane Q4 onwards. The underlying inflation pressures continue to remain benign at this juncture,” said the RBI Governor. 

However, generalisation of inflation through second-round effects on expectations and wages is a distinct possibility, warranting a close vigil. The outlook also remains clouded due to the sub- normal south-west monsoon forecast and El Nino risks, he said.

The Central Bank projected CPI inflation for 2026-27 at 5.1 per cent, with Q1 at 4.2 per cent; Q2 at 5.1 per cent; Q3 at 5.9 per cent; and Q4 at 5.4 per cent. 

“Core inflation is projected at 4.7 per cent for 2026-27. These forecasts are subject to upside risks due to global supply chain disruptions, global commodity price shocks, uncertainty about the spatial and temporal distribution of the south-west monsoon and El Nino conditions. Adequate stock of foodgrains and satisfactory reservoir levels, however, provide some comfort,” said Malhotra.