India GDP Growth Data Highlights: GDP grows at 7.8% in Q4 FY 2025-26, beats forecasts; full year growth at 7.7%

The National Statistical Office (NSO) has estimated India’s gross domestic product (GDP) growth for fiscal 2026 at 7.7%, slightly higher than the second advance estimate of 7.6% released in February.

The upward revision reflects a higher-than-expected growth in the fourth quarter, which printed at 7.8%—down from 8.0% in the third quarter but above the average growth of 7.4% in the previous 10 quarters—driven by healthy private consumption and fixed investments.

Notably, the growth was despite headwinds from the West Asia conflict that began towards the end of February and intensified in March.

In fiscal 2027, however, growth is set to weaken amid multiple headwinds, including higher prices of crude and other commodities, softer global growth and forecast of a below-normal monsoon. Global supply chain disruptions are already intensifying cost pressures and reduced input availability is expected to add to the pressure.

We maintain our GDP growth forecast for fiscal 2027 at 6.6%, with risks tilted to the downside. Despite the slowdown in real GDP, the nominal GDP growth is set to be higher due to higher inflation based on both Wholesale Price Index and the Consumer Price Index, says Dharmakirti Joshi, Chief Economist, Crisil Limited.

GDP data reflects a balanced picture with respect to different components of economy, says CEA V Anantha Nageswaran.

"GDP growth surprised ‌on the upside for the fourth quarter, led by stronger-than-expected growth in consumption, investments and valuables. The ​disruption due ​to the West ⁠Asia conflict in March seems to have had a limited impact on economic momentum."

"We do expect GDP growth to moderate ​in the first quarter of FY27, as elevated energy costs and their impact on margins weigh on growth. However, we anticipate upbeat export growth along with household consumption to provide support,” says Sakshi Gupta, Principal Economist, HDFC Bank.

"Growth wrapped up FY26 on a ​strong note. High frequency data for rural and urban demand had pointed to relative resilience in the quarter. While the US-Iran ​conflict broke out towards the end of ⁠the fourth ‌quarter of FY26, output in the quarter ​was relatively ​insulated from bulk of adverse impact."

"Markets are ⁠likely to move on from the backward looking data ​and focus on potential spillover risks into ​FY27, particularly given the prospect of a prolonged disruption in the supply of critical inputs to downstream industries, higher energy as well as food costs impacting purchasing power and tighter financial conditions,” says Radhika ​Rao, Senior Economist, DBS Bank.

The government has also revised upwards the GDP growth estimates for the October-December 2025 quarter to 8%. Earlier the growth had been projected at 7.8%.

India’s GDP growth for the financial year 2025-26 beat estimates at 7.7%. The government’s own estimates released in February had suggested a growth of 7.6%. This is despite some impact of the US-Iran conflict on the economy in March.

During the fourth quarter of FY 2025-26, real GDP at constant prices is estimated at ₹87.77 lakh crore, compared with ₹81.40 lakh crore in the corresponding quarter of FY 2024-25. This represents year-on-year growth of 7.8%.

Nominal GDP, measured at current prices, is projected to reach ₹94.65 lakh crore in the January-March quarter of FY 2025-26, up from ₹86.75 lakh crore in the same period a year earlier, reflecting growth of 9.1%.

Real Gross Value Added (GVA) for the fourth quarter is estimated at ₹80.18 lakh crore, compared with ₹74.32 lakh crore in Q4 FY 2024-25, translating into a growth rate of 7.9%.

Meanwhile, nominal GVA at current prices is estimated at ₹86.46 lakh crore during the quarter, rising from ₹78.68 lakh crore in the year-ago period. This marks a growth rate of 9.9%.

India's real GDP, measured at constant prices, is estimated to reach ₹323.12 lakh crore in FY 2025-26, compared with the First Revised Estimate of ₹299.89 lakh crore for FY 2024-25. This translates into a growth rate of 7.7% during FY 2025-26, higher than the 7.1% recorded in the previous financial year.

At current prices, nominal GDP is projected to rise to ₹346.36 lakh crore in FY 2025-26 from ₹318.07 lakh crore in FY 2024-25, reflecting growth of 8.9%.
Real Gross Value Added (GVA) is estimated at ₹294.91 lakh crore for FY 2025-26, up from ₹273.36 lakh crore in the preceding year. The increase represents a growth rate of 7.9%, compared with 7.3% in FY 2024-25.

Meanwhile, nominal GVA at current prices is expected to climb to ₹314.87 lakh crore during FY 2025-26 from ₹288.54 lakh crore a year earlier, registering growth of 9.1%.

Economic activity was primarily supported by strong performance in the secondary and tertiary sectors, which recorded growth rates of 8.8% and 9.3%, respectively, at constant prices. The primary sector registered a growth rate of 3.2%, largely driven by gains in agriculture and fisheries.

Among individual sectors, manufacturing, trade and repair services, hotels, transport, communication, broadcasting-related services, storage, and financial, real estate and professional services delivered double-digit growth at both constant and current prices during FY 2025-26.

From the expenditure perspective, both Private Final Consumption Expenditure (PFCE) and Gross Fixed Capital Formation (GFCF) recorded growth exceeding 7.5% during the financial year, indicating sustained momentum in consumption as well as investment activity.

India's economy is estimated to have expanded by 7.7% in real terms during FY 2025-26, while nominal GDP growth has been placed at 8.9%. Gross Value Added (GVA) is projected to have grown by 7.9% at constant prices and 9.1% at current prices during the year.

India’s GDP grew at 7.8% for the fourth quarter of the financial year FY 2025-26.

India's economic growth is expected to exceed the projections made by the Reserve Bank of India (RBI), according to Neelkanth Mishra, who recently took over as India's Executive Director at the World Bank.

In its monetary policy review announced on Friday, the RBI lowered its GDP growth estimate for FY26 to 6.6% from 6.9% and revised its FY27 forecast to 6.3% from 6.7%.

Mishra, however, believes the central bank's outlook understates the economy's underlying strength. He argued that actual economic activity appears to be considerably stronger than what is reflected in the RBI's estimates.

Speaking to ANI, the World Bank executive director said internal assessments suggest the economy expanded at a pace close to 8% during the February-March period.

"I believe the RBI's projections are somewhat conservative," Mishra said. "In my view, economic performance is significantly stronger than what has been factored into those forecasts. But when an institution serves as the official forecaster, it is natural for it to adopt a more cautious approach."

India is projected to overtake China in terms of its share of global gross domestic product measured on a purchasing power parity (PPP) basis by around 2060, according to a report prepared by researchers affiliated with the World Inequality Lab.

The World Inequality Lab (WIL), based at the Paris School of Economics, conducts research focused on understanding and analysing inequality across the world.

In its report, Global Justice Report: A Plan for Equality and Prosperity With Planetary Boundaries, the research group noted that China currently accounts for roughly 20% of global GDP in PPP terms, placing it about one-third ahead of the US. Based on its benchmark projections, China's share is expected to grow further and become nearly twice that of the US by 2035.

However, the report highlighted that China's demographic profile is undergoing a significant shift. Its share of the global population has been steadily shrinking, falling from approximately 23% in 1945 to around 17% in 2025. By 2100, that figure is projected to decline to less than 8%.

As a result of this sharp demographic contraction, the report expects China's share of world output to eventually level off and begin declining during the latter half of the 21st century. Under these projections, India is expected to surpass China in terms of its contribution to global GDP around 2060.

“The RBI MPC's decision to maintain a neutral stance and keep rates unchanged is on expected lines and reaffirms its commitment to balancing growth and price stability. A neutral stance at this point provides the predictability that borrowers and financial institutions need, while allowing earlier rate actions to transmit more fully through the system.

The RBI has acknowledged war related impact on the economy, and accordingly lowered GDP growth expectations. While we are monitoring the impact of the West Asia crisis on fuel prices and certain borrower segments, we believe the RBI’s assurance on liquidity support and stable interest rates should support overall market growth. Adequate system liquidity will go a long way to support credit growth and rates trajectory. We expect housing finance and retail business to continue growth momentum and be key growth drivers

The government promulgated an ordinance to exempt FII investments in G-Secs from both capital gains and withholding taxes is a significant and timely move. This move will meaningfully deepen India's bond market and attract long-term stable foreign capital. Together, rate stability, liquidity assurance and a more welcoming foreign investment framework create a constructive environment for NBFCs and the broader financial sector to sustain lending momentum and support India's growth story,” says Tata Capital MD and CEO, Rajiv Sabharwal.

“The tone of the policy is cautiously neutral with a hawkish undercurrent. The RBI held its ground, avoided surprises, but sent a clear signal that the next move if any is more likely a hike than a cut. The unanimous 6-0 vote for a hold signifies consensus, but the RBI was careful not to signal comfort with the current rate level. It raised the FY27 inflation forecast by 50 bps to 5.1% while simultaneously cutting the GDP forecast to 6.6% can be seen as stagflationary in nature.

Upside risks to inflation are beginning to outweigh growth concerns leading to a mild tightening cycle, most likely October policy. The Governor's comments implying that inflation differentials are consistent with 3–3.5% annual INR depreciation suggest the RBI may be more tolerant of a weaker rupee than markets had assumed. Rupee has depreciated approximately 6% this year and as expected RBI has announced foreign capital flow measures. The underlying messaging from today’s policy is RBI being under pressure due to unfavourable macros and may resort to tough measures if energy prices stay elevated, the monsoon disappoints, or inflation generalizes beyond supply-side shocks,” says Rahul Singh, Head - Fixed Income at LIC Mutual Fund AMC.

“For fixed deposits depositors, today's policy pause provides a degree of reassurance. The RBI has raised its inflation forecast for FY27 to 5.1% while keeping the repo rate unchanged at 5.25%, suggesting that interest rates may remain elevated for longer than previously expected. This reduces the likelihood of any immediate decline in fixed deposit rates and supports the current return environment for savers.

At present, select private banks are offering up to 7.35% on specific tenures, while several mid-sized lenders continue to offer rates above 7%. Senior citizens can typically earn an additional 25 to 50 basis points over these rates. With inflation projected to rise through the year and peak at 5.9% in the third quarter, preserving real returns remains an important consideration.

Rather than attempting to time future rate movements, depositors may benefit from spreading investments across one, two and three-year tenures. A laddered approach helps lock in current yields while retaining flexibility to reinvest if rates move higher or liquidity needs change. In the current environment, the RBI's message is not that rates are headed sharply lower, but that inflation risks have increased sufficiently to warrant caution. That should encourage savers to review their deposit strategy sooner rather than later,” says Adhil Shetty, CEO, Bankbazaar.

“The RBI’s decision to maintain the repo rate at 5.25% while retaining a neutral stance reflects a measured and pragmatic approach amid global uncertainties and evolving inflation dynamics. For the real estate sector, stability in interest rates is as important as rate cuts, as it strengthens buyer confidence and enables long-term investment planning. A predictable borrowing environment allows homebuyers to make informed decisions and supports developers in executing projects efficiently. We expect the continued stability in the interest rate regime to sustain housing demand across segments, particularly in the mid-income and premium categories, while contributing positively to the sector’s growth momentum,” says Ashish Bhutani, CEO, Bhutani Infra.

The RBI has lowered the growth projections by 30 bps to 6.6% in FY 27 from its earlier projection. The growth projections have been caveated with concerns around several headwinds and risks. The key ones flagged by the RBI are the Middle East conflict and consequently higher commodity and fuel prices as well as the uncertainty around the monsoon that will have an impact on the food prices. Any spike in the food prices will take the inflation closer to the higher range of targeted inflation band of 6%. Higher inflation would lead to a strain in household discretionary spending ability leading to a negative impact on consumption and hence growth.

The MPC with inflation targeting as its objective may be forced to increase policy rates but that could further add to the growth headwinds. If all the downside risk highlighted in the RBI statement materialise that are Middle East conflict dragging longer, monsoons being deficient and capital outflows not ebbing, then the growth rate would test the 6% mark with a downside.

However, if the monsoons while being deficient are well distributed and we have a resolution of the Middle East conflict in the next couple of months, then RBI’s projections of 6.6% growth is likely to be realised without a need for the MPC to undertake a policy rate action, says Ranen Banerjee, Partner and Leader, Economic Advisory, PwC India.

“The RBI delivered a policy rooted in the Tinbergen principle, clearly separating instruments across objectives. While the MPC remained focused on price stability by keeping the repo rate unchanged, the RBI complemented this with measures aimed at boosting capital inflows. The expansion of the Fully Accessible Route (FAR) to include new 15-, 30- and 40-year G-Secs, along with the removal of FPI investment restrictions under the General Route, should enhance foreign participation in government securities and support the government borrowing programme. From a fixed income market perspective, the widening of the investable universe and easing of participation constraints should improve demand for longer-duration G-Secs, deepen market liquidity and support a more stable foreign investor presence in India's bond market over time. Alongside the liberalisation of investment norms for NRIs, OCIs and other overseas individuals, the measures strengthen India's capital account at a time when external financing conditions remain dynamic, while also supporting rupee stability,” says Kaustubh Gupta, CIO – Fixed Income, Aditya Birla Sun Life AMC Ltd.

“The status quo on policy rates was as per our expectations. With a data-driven approach, the Monetary Policy Committee (MPC) is keenly watching risks on inflation and growth, which are yet to materialise meaningfully. Headline inflation has stayed below its 4% target so far.

Bigger moves were seen on attracting foreign capital and supporting the rupee, which has depreciated sharply, posing a bigger concern than growth and inflation so far.

The RBI focussed on easing domestic regulations for foreign capital investors. It, however, gave clear communication on its rupee management, which remains rooted in curbing excessive volatility and speculation rather than defending a specific level.

Our forecasts of CPI inflation at 5.1% and GDP growth at 6.6% for this fiscal align with those of the MPC. With this, headline inflation will stay within MPC’s target range of 2-6% despite rising from the current rate and edging closer to the upper tolerance inflation band in the interim. If the energy prices normalise in the coming months, we expect the MPC to look through the short-term rise in inflation.

The MPC will balance its inflation mandate with growth, where downside risks are also deepening with prolonging of the conflict.

In the milieu, we expect the MPC to keep rates unchanged this fiscal,” says Dipti Deshpande, Principal Economist, Crisil.

“RBI’s decision to keep the repo rate unchanged at 5.25% is a great move. This will stabilise India’s growth process amidst turbulent times. This also reduces the chances of any immediate reduction in FD rates. This, in turn, will support the current return environment for depositors.

With the rupee hitting record lows due to rising crude oil prices and record outflows from Indian equities, the regulator has also taken a series of measures to attract more dollar investments into the country.

The RBI’s decision to exempt foreign institutional investors and the Bank for International Settlements from capital gains ‌tax on receipts arising from interest or sale of government securities is a welcome move. Removing strict limits on how long foreign investors must hold their investments (short-term) or how much they can invest in specific areas is in line with international market trends.

All newly issued 15-year, 30-year and 40-year Government Bonds will now be available under the Fully Accessible Route (FAR), making it easier for foreign investors to invest in them. These bonds are already included in major global bond indexes, which could attract more foreign investment into India. These measures should help attract foreign capital for government borrowing.

Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) can now invest much more money in listed equity instruments without requiring SEBI registration. The move is aimed at facilitating greater overseas participation in Indian financial markets,” says Santosh Agarwal, CEO, Paisabazaar.

"We will not only be able to tackle the current situation, but also treat this is an opportunity to strengthen ourselves further, said RBI governor Sanjay Malhotra.

Compared to not just other economies, but also previous instances of such economic turmoil, we are much better placed, said RBI governor Sanjay Malhotra.

“In terms of the quantum, we are hopeful of reasonable flows, both, you know, from ECB and other various measures have been announced today, so as a result of all these measures, we expect healthy flows, not only, you know, in this period of three to four months that we have given short window for ECBs and FCNRB deposits, but there have been other measures for equity as well as government bonds, or put together,” said RBI governor Sanjay Malhotra.

“With inflation pressures largely emanating from supply-side factors like crude and weather, monetary tightening has limited efficacy at this stage. In this environment RBI has chosen to remain patient, focus on core inflation dynamics, and use liquidity or macro tools rather than policy rates directly, thereby preserving its focus at the moment on supporting the growth while still maintaining policy flexibility,” says Rahul Goswami, CIO & MD, India Fixed Income, Franklin Templeton.

With the RBI holding the repo rate steady at 5.25%, it takes a lot of the guesswork out of the equation for everyday families. Borrowing costs aren't the main source of stress anymore because the previous rate cuts have already given people some breathing room on their EMIs. The fence-sitting phase is officially over because waiting around for deeper interest rate cuts isn't a strategy.

The real conversation in the market right now has shifted away from interest rates towards job security and impact of the war. In this environment, a stable monetary environment provides much-needed continuity for both investors and end-users, and reinforces long-term expansion across the residential real estate market, says Ashish Acharya, Founder & CEO, Propsoch, a Bengaluru-based homebuyer advisory platform.

The rupee strengthened by 50 paise against the US dollar on Friday, climbing to 95.24 after the Reserve Bank of India announced measures to ease investment norms for foreign portfolio investors in government securities.

According to forex market participants, sentiment received a boost following the RBI's policy announcements, particularly after the central bank reiterated that India's foreign exchange reserves remain adequate to absorb potential external shocks.

In the interbank foreign exchange market, the domestic currency opened at 95.72 per dollar before advancing further to touch an intraday high of 95.24. This represented a gain of 50 paise compared with its previous closing level.

In the previous session on Thursday, the rupee had ended marginally stronger, appreciating by 2 paise to settle at 95.74 against the US dollar.

As businesses increasingly adopt agile and cost-efficient workspace strategies, a supportive policy framework will further accelerate expansion plans and strengthen India’s evolving commercial real estate ecosystem. The steady interest rates and borrowing costs support sustained leasing momentum and long-term investment decisions, thereby increasing demand for office space and supporting new developments. This is particularly important at a time when leasing activity is gaining traction across key markets.

Easier credit availability attracts both individual and institutional investors, driving real estate growth. Hence, this supportive stance will have a pronounced impact on the real estate sector, easing borrowing costs and improving credit availability. Overall, a stable interest rate environment offers much-needed predictability, supporting informed decision-making, says Manas Mehrotra, Founder, 315Work Avenue, a leading coworking player.

RBI’s decision to hold the repo rate is much welcome as it provides much-needed stability at a time of heightened geopolitical uncertainty and volatile oil prices, while safeguarding domestic macroeconomic stability. A stable interest-rate environment will play a crucial role in sustaining homebuyer confidence and developers alike. The real estate sector has shown resilience with strong sales, and a supportive monetary policy and measured approach will only accelerate the sectors upward trajectory.

Additionally, continued policy support will encourage faster project execution, enhance developer confidence, and improve access to capital, without the overhang of rising borrowing costs. With infrastructure growth, urbanization, and rising consumer aspirations driving long-term demand, a growth-oriented monetary policy can play a significant role in sustaining demand across segments, and provide further momentum to the real estate sector’s growth in the coming quarters, says Ramani Sastri - Chairman & MD, Sterling Developers.

The RBI’s decision to hold the repo rate at 5.25% was widely expected. The more important message from this policy is that India’s key macroeconomic challenge is no longer domestic demand—it is the external sector. While inflation remains below target today, the RBI has raised its inflation outlook to 5.1%, with inflation projected to approach 6% later in the year. This is due to rising oil prices, supply-chain disruptions, and an uncertain monsoon. These are largely supply-side pressures that monetary policy alone cannot effectively address.

At the same time, growth has moderated but remains resilient, supported by healthy manufacturing activity, strong credit growth, and continued government capital expenditure. The economy is slowing at the margin, not stalling.

What stands out is the RBI’s growing focus on external vulnerabilities. Higher oil prices threaten to widen the current-account deficit, while persistent foreign portfolio outflows and elevated global uncertainty could make external financing more challenging. The central bank’s accompanying measures to attract capital and strengthen external financing conditions signal a clear shift in priorities.

This is not the posture of a central bank primarily concerned with domestic inflation. It is the response of a central bank preparing for potential external stress. The real debate is no longer whether rates move by 25 basis points, but whether India can successfully navigate a world of expensive oil, geopolitical uncertainty, and volatile capital flows. The rate pause was expected; the RBI’s quiet focus on protecting the external account is the story that will likely shape monetary policy in the months ahead, says Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Group.

The Reserve Bank of India has adopted a pragmatic "wait-and-watch" strategy, holding the repo rate unchanged at 5.25% amidst a highly turbulent global backdrop. While domestic demand, private consumption, and services exports have exhibited strong resilience, intensifying global conflicts, supply disruptions, and elevated energy prices are beginning to weigh on economic activity. Compounded by a sub-normal monsoon forecast and El Niño risks, the RBI chief noted considerable risks to both growth and inflation, choosing to remain strictly data-dependent until greater clarity emerges.

Reflecting these headwinds, the central bank downgraded its FY27 Real GDP growth projection to 6.6% (down from 6.9%) and raised its FY27 inflation outlook to 5.1%. Although current CPI inflation remains below target, baseline projections indicate it could firm up to the upper range of the tolerance band by Q3FY27 due to an uncertain food price outlook and potential second-round generalization effects. The impact of these supply shocks is expected to noticeably weigh on the economy from Q4 onwards as higher energy costs pass through to retail products.

In a highly positive move for the capital markets, the government has exempted Foreign Institutional Investors (FIIs) from capital gains tax on any interest earned from government securities. This fiscal cushion arrives at a crucial time, offering a strong shield to domestic markets as the RBI chief warned of volatile forex markets driven by shifting global sentiments, says Sumit Singhania, Head of Research- Bajaj Broking.

RBI expectedly kept the rate and stance unchanged, while highlighting the amplified risks on the inflation front. We expect 50bp of rate hike beginning in October. On the positive side, the measures taken by the RBI to attract capital would help ease pressure on the INR,” said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.

RBI as widely expected has kept the interest rates unchanged with a continuation of the neutral stance, signifying the continued faith in domestic growth and demand while acknowledging that the global uncertainties do exist and will be closely watched to be nimble on future policy actions.

RBI governor acknowledged the concern around exchange rate volatility stating that disorderly market conduct and speculation will be dealt with through necessary interventions without trying to target a specific exchange rate. This is important given the US governments focus to tag countries as currency manipulators when they see market intervention from the relevant countries. This communication helps protect sovereignty while respecting theme of free markets, says Vivek Iyer, Partner and Financial Services Risk Leader, Grant Thornton Bharat.

“We shall remain vigilant, and we are fully prepared to do whatever it takes to preserve an orderly market conditions. To conclude, global economic conditions and sentiments continue to be frayed without any meaningful resolution of the West Asia conflict, while these have adversely impacted the domestic growth inflation outlook. The economy at this point is relatively strong.

We shall put in place policies to meet the challenges while taking measures to further strengthen the macroeconomic fundamentals of the country,” said RBI governor Sanjay Malhotra.

“I have often reiterated a word on our exchange rate policy. It continues to remain unchanged. We do not target any specific level or band, instead we allow the exchange rate to be determined by market forces.

Our experience, however, suggests that it may sometimes witness movements often caused by speculative pressures, especially in the wake of heightened uncertainty, some of which we witnessed recently, which are not in sync with the fundamentals and are disruptive of economic activity.

While our objective is not to resist market-driven adjustments, we shall curb excessive volatility and prevent disorderly market movements. While our foreign exchange reserves provide us with sufficient buffer against external shocks, we have a very broad range of regulatory and market-based instruments to respond effectively as may be required,” said RBI governor Sanjay Malhotra.

Concessional forex swap will be provided for about four months till 13 September 2026 to incentivize ECB's external commercial borrowings by public sector undertakings.

First, for government securities under FAR, which is the fully accessible route, we are expanding the universe of specified securities by including all new issuances of 15, 30, and 40 year tenure G-Secs. Till now only securities securities, government securities up to 10 year tenure were included.

India's Forex reserves stood at a very healthy $682.2 billion. These are adequate in terms of the standard metrics of reserve adequacy, with an import cover of about 11 months and external debt cover of 89 plus percent,” said RBI governor Sanjay Malhotra.

“The external sector has successfully navigated the challenges of elevated tariff and trade-related uncertainties last year amidst a turbulent global economic environment. The surge in energy prices and persistent trade policy uncertainties continue to pose upside risks to India's current account deficit this year. Services, trade surplus, and inward remains remittances, however, are expected to provide some comfort,” said RBI governor Sanjay Malhotra.

“CPI inflation for this year now is projected to be at 5.1% about 50 basis points more than earlier projected. Q1 at 4.2%, Q2 at 5.1%, Q3 at 5.9% and Q4 at 5.4%. These forecasts are subject to upside risks due to heightened uncertainty, because of a variety of reasons, global supply chain disruptions, global commodity price shocks, uncertainty about the spatial and temporal distribution of the southwest monsoon, and risks from El Nino conditions getting developed,” said RBI governor Sanjay Malhotra.

“Real GDP growth for this year is now projected at 6.6%. We had earlier projected 6.9%. Now projected at 6.6% for Q1, at 6.3% for Q2, at 6.5% for Q3 and Q4 at 6.8%. Prolonged global supply chain disruptions, volatility in global financial markets, and weather-related shocks continue to pose downside risks to the domestic growth outlook,” said RBI governor Sanjay Malhotra.

“Going ahead, the rise in prices of energy and other inputs, coupled with supply disruptions, is likely to weigh on economic activity, while import diversification in affected commodities is likely to improve supply. It would still come at a higher cost.

The full impact, however, will depend on the duration of the conflict, the time taken for normalization of supply chains, and the burden sharing approach among the various stakeholders. The pass through of higher energy prices to retail products is also becoming evident.

Additionally, the projected deficiency in the southwest monsoon will have implications for agriculture production and rural demand. However, the programs and initiatives for crop diversification, water harvesting and conservation, climate resilient practices, and short duration crops, among others, are expected to mitigate the impact.

Sustained momentum in services continuing impact of GST rationalization and broadly stable employment conditions should continue to support urban consumption, even though rising inflation could be a drag on the purchasing power of households,” said RBI governor Sanjay Malhotra.

“The second advanced estimates released by NSO placed India's GDP growth for last year at 7.6% .This is owing to strong expansion in private consumption, as well as fixed investment, robust performance of manufacturing and services sectors were the growth drivers from the supply side.

As per several high frequency indicators, domestic economic activity remained largely steady even since the outbreak of the conflict. India's manufacturing and services PMI further suggest that both sectors continue to be resilient, and business expectations are still positive 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 this year. This is not withstanding elevated freight and insurance costs ,” said RBI governor Sanjay Malhotra.

“Although risks of higher inflation have amplified the MPC felt it would be prudent to wait for greater clarity to emerge. Accordingly, the MPC voted to keep the policy repo rate unchanged. At the same time, the MPC will continue to remain data dependent and closely monitor the developments, including supply side pressures getting embedded in the general price level and inflation expectations. As mentioned, the MPC also decided to retain the neutral stance ,” said RBI governor Sanjay Malhotra.

“CPI inflation remains below the target, despite global shock, as the pass through to domestic prices has been limited, while the baseline projections point towards headline inflation firming up towards the upper tolerance level,” said RBI governor Sanjay Malhotra.

“The global environment has deteriorated since the last policy meeting in April, with the conflict lingering amidst a fragile truce. The adverse implications of the extended disruption in supply chains and elevated energy prices are reflected in the moderation of growth and increase in inflation projections from the April policy “, said RBI governor Sanjay Malhotra.

“The Monetary Policy Committee met on the third, fourth, and fifth of this month to deliberate and decide on the policy repo rate after a detailed assessment of the evolving macroeconomic and financial developments, and the outlook, the MPC voted unanimously to keep the policy repo rate under the lap unchanged at 5.25%,” said RBI governor Sanjay Malhotra.

“It is important to not only confront and address these challenges, but also at the same time take this as an opportunity to further enhance our resilience, global economic outlook re outlook remains clouded by the continuing geopolitical impasse in West Asia as sharply escalating energy prices and global supply chain disruptions continue to hinder economic activity, said RBI governor Sanjay Malhotra.