RBI Revises Near-Term GDP Growth Outlook, Defers Full-Year FY27 Forecast, Q1, Q2 FY27 Growth Projections Revised Upward
Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday announced an upward revision in India’s real GDP growth projections for the first two quarters of the next financial year, 2026–27, while deferring the full-year growth forecast to the April policy meeting. Taking into account various domestic and global factors, the RBI has revised the real GDP growth projection for the first quarter (Q1) of FY27 to 6.9 percent and for the second quarter (Q2) to 7 percent.
Full-Year Forecast Deferred to April Policy
The Governor said that the risks to the growth outlook are evenly balanced. However, projections for the full financial year have been deferred, as the new GDP series is scheduled to be released later in the month and will be incorporated in the April policy. He said, “Real GDP growth projections for Q1 and Q2 of next year, that is 2026–27, are revised upward slightly to 6.9 percent and 7 percent respectively… I mentioned that we are deferring the projections for the full year to the April policy as the new GDP series will be released later in the month.”
Comparison With December Policy Estimates
In the December policy meeting, the RBI had projected GDP growth for Q1 and Q2 of 2026–27 at 6.7 percent and 6.8 percent, respectively, indicating a marginal upward revision in the latest assessment.
Current-Year Growth Remains Strong
The Governor said the Indian economy continues on a steady improving trajectory, with real GDP poised to register a significantly higher growth of 7.4 percent in the current year compared to the previous year.
External Trade and Global Factors
On the external front, the Governor mentioned that the recently concluded India–EU free trade agreement and the prospective India–US trade deal, along with other trade agreements, are expected to support exports over the medium term. Despite global headwinds, growth has been supported by private consumption and fixed investment, although net external demand remained a drag as imports outpaced exports.
Supply-Side Trends and Sectoral Performance
On the supply side, real Gross Value Added (GVA) growth is estimated at 7.3 percent during the year, driven by a strong contribution from the services sector and a revival in manufacturing activity.
Outlook for the Coming Year
Looking ahead, the Governor noted that economic activity is expected to hold up well next year. Agricultural activity is likely to be supported by healthy reservoir levels, robust rabi sowing, and improved crop vegetation conditions. The improving performance of the corporate sector and sustained momentum in the informal sector are expected to boost manufacturing, while construction sector growth is projected to remain firm. The services sector is expected to stay resilient, supported by strengthening domestic demand.
Demand, Consumption, and Investment Drivers
Preliminary results from high-tech firms indicate an improvement in business activity. On the demand side, private consumption momentum is expected to sustain next year. Rural demand remains steady due to better agricultural activity and improving rural labour market conditions, while urban consumption is expected to strengthen further with continued support from GST rationalisation and monetary easing. Investment activity is likely to gain from high capacity utilisation, accelerating bank credit, favourable financial conditions, and the government’s continued focus on infrastructure, along with measures announced in the Budget.
Taking all these factors into consideration, the RBI revised the near-term growth outlook upward, while deferring the full-year FY27 projection to the April policy meeting.