RBI MPC meeting announcements: Governor Sanjay Malhotra, in his first policy review, estimated India’s GDP growth rate for the FY26 to be 6.7. Governor Malhotra said Q1 is expected to be at 6.7 per cent, Q2 at 7 per cent, Q3 at 6.5 per cent, and Q4 too at 6.5 per cent. “Risks are evenly balanced,” he said.
Economic activity is expected to improve in the coming year, agricultural activity remains upbeat, manufacturing activity is expected to recover gradually in the second half of this year and beyond, early corporate results indicate mild recovery in the manufacturing sector, mining and electricity are rebounding from monsoon-related disruptions in Q2, business expectations remain upbeat, services sectors activity continues to be resilient, said the Governor.
On the demand side, rural demand continues to be on an uptrend, while urban consumption remains subdued with high-frequency indicators providing mixed-signals, he said. “Going forward, improving employment conditions, tax relief in the Union Budget, moderating inflation, together with healthy agricultural activity bode well for household consumption. Government consumption expenditure is expected to remain modest,” said Governor Malhotra as he said factors augur well for growth in fixed investment.
In the December policy meeting, Governor Malhotra’s predecessor, former RBI Governor Shaktikanta Das projected the GDP growth for the first quarter of the following year at 6.9 per cent, and the second quarter at 7.3 per cent.
The Economic Survey for 2024-25 tabled in the Parliament by Finance Minister Nirmala Sitharaman ahead of the Union Budget 2025, estimated GDP to grow in the range of 6.3 per cent and 6.8 per cent for FY26. “There are many upsides to domestic investment, output growth and disinflation in FY26. There are equally strong, prominently extraneous, downsides too. Nonetheless, the fundamentals of the domestic economy remain robust, with a strong external account, calibrated fiscal consolidation and stable private consumption. On balance of these considerations, we expect that the growth in FY26 would be between 6.3 and 6.8 per cent,” the Economic Survey stated.