RBI Monetary Policy Meeting: Gov Malhotra lowers India’s GDP growth projection for 2025-26 to 6.5% from 6.7%

RBI Governor Sanjay Malhotra, in the first RBI monetary policy meeting announcements for the fiscal year, projected India’s GDP growth rate for the year 2025-2026 to be 6.5 per cent. He said Q1 growth is expected at 6.5 per cent, Q2 at 6.7 per cent, Q3 at 6.6 per cent and Q4 at 6.3 per cent. 

The RBI Governor stated that the year has begun on an uncertain note, due to the tariffs announced by US President Donald Trump. Headwinds from global trade continues to pose risks, he said. 

"First and foremost, uncertainty in itself dampens growth by affecting investment and spending decisions both of businesses and households. Second, the dent on global growth due to trade frictions will also impede domestic growth. Third, higher tariffs shall have a negative impact on net exports. The impact of relative tariffs, our relative tariffs vis some of the other countries are quite low. Then there is the unknown of the elasticities of our export and import demand and the policy measures adopted by us. India is very vigorously and proactively engaging with the US administration on the foreign trade agreement," he said.

In his inaugural policy review in February, Governor Malhotra had projected India's GDP growth rate for the financial year 2026 to be slightly higher at 6.7 per cent, with the first quarter anticipated to grow at 6.7 per cent, the second quarter at 7 per cent, and both the third and fourth quarters at 6.5 per cent. He stated that the risks are evenly balanced. He expected economic activity to improve this year. 

Meanwhile, the RBI also cut the repo rate for the second consecutive time by 25 bps to 6 per cent. He changed the stance from ‘neutral’ to ‘accommodative’.