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RBI Projects 6.9% GDP Growth; Flags Export Risks, Domestic Demand Strong
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The Reserve Bank of India (RBI), in its latest assessment released on Wednesday, has projected India’s GDP growth at 6.9% for the current financial year, marking a moderation from the 7.6% growth estimated for 2025–26. This downward revision reflects emerging global and domestic challenges, particularly the persistent rise in commodity prices and ongoing supply chain disruptions triggered by geopolitical tensions in the West Asia region. These factors are expected to exert pressure on input costs, inflation dynamics, and overall economic activity.
While announcing the first bi-monthly monetary policy for FY 2026–27, RBI Governor Sanjay Malhotra noted that India’s merchandise exports may face headwinds in the coming months. Disruptions in critical international shipping routes, coupled with a significant increase in freight charges and insurance premiums, could adversely impact export competitiveness and trade volumes. These logistical challenges may particularly affect sectors dependent on timely and cost-efficient global supply chains.
Despite these concerns, the RBI remains cautiously optimistic about the resilience of the domestic economy. The services sector continues to demonstrate strong and consistent growth, acting as a key driver of economic momentum. Additionally, the ongoing benefits of GST rationalisation are expected to improve tax efficiency and compliance, thereby supporting business activity.
Further, rising capacity utilisation in the manufacturing sector indicates improving demand conditions and investment sentiment. The healthy balance sheets of both financial institutions and corporates also provide a strong foundation for sustained credit growth and capital expenditure. Together, these factors are likely to support domestic demand and economic stability, helping to offset some of the external risks and uncertainties.
While announcing the first bi-monthly monetary policy for FY 2026–27, RBI Governor Sanjay Malhotra noted that India’s merchandise exports may face headwinds in the coming months. Disruptions in critical international shipping routes, coupled with a significant increase in freight charges and insurance premiums, could adversely impact export competitiveness and trade volumes. These logistical challenges may particularly affect sectors dependent on timely and cost-efficient global supply chains.
Despite these concerns, the RBI remains cautiously optimistic about the resilience of the domestic economy. The services sector continues to demonstrate strong and consistent growth, acting as a key driver of economic momentum. Additionally, the ongoing benefits of GST rationalisation are expected to improve tax efficiency and compliance, thereby supporting business activity.
Further, rising capacity utilisation in the manufacturing sector indicates improving demand conditions and investment sentiment. The healthy balance sheets of both financial institutions and corporates also provide a strong foundation for sustained credit growth and capital expenditure. Together, these factors are likely to support domestic demand and economic stability, helping to offset some of the external risks and uncertainties.
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