RBI raises GDP growth projection for FY25 to 6.8%
What's the story
The Reserve Bank of India (RBI) has revised its Gross Domestic Product (GDP) growth projection for the current fiscal year upward, from 6.5% to 6.8%. The revision was announced by RBI Governor Sanjay Malhotra while unveiling the fourth bi-monthly monetary policy for FY25-26. The Monetary Policy Committee (MPC) also unanimously decided to keep the repo rate unchanged at 5.5%.
Growth forecast
Growth estimate for September quarter raised to 7%
The RBI has also raised its growth estimate for the September quarter from 6.7% to 7%. However, for other quarters, the GDP growth projections have been trimmed. The GDP growth forecast has been revised to 6.4% for Q3 (down from 6.6%) and 6.2% for Q4 (down from 6.3%). For Q1 of FY27, growth is projected at 6.4%, slightly lower than the earlier estimate of 6.6%.
Rate stability
RBI holds repo rate at 5.5%
The RBI has maintained the repo rate at 5.5%, after a total cut of 100 basis points since February. This decision comes amid global uncertainties such as trade disputes, volatile commodity prices, and geopolitical tensions that continue to weigh on India's growth outlook. However, resilient rural consumption, strong services activity, sustained public capital expenditure and normal monsoon are likely to keep domestic demand robust.
Forecast revision
ADB cuts India's growth forecast for FY26, FY27
The Asian Development Bank (ADB) has cut India's growth forecast for FY26 to 6.5%, down from its April estimate of 6.7%. This revision comes in light of the potential impact of the 50% US tariffs on Indian exports. The ADB also lowered its projection for FY27 to 6.5% from an earlier estimate of 6.8%. "India faces the steepest tariff hikes among developing Asian economies, prompting a downgrade in its growth outlook," said ADB in a report.