RBI Monetary Policy Committee Announcements: Governor Sanjay Malhotra, during his MPC announcements on Friday, projected a growth rate of 7.4% this year. Imports exceeded exports.

The Malhotra government projected an upward revision to growth in the first quarter of 2026-27 to 6.9 percent and in the second quarter to 7 percent.

“Private consumption and fixed investment contributed significantly to overall growth. Net external demand, however, remained a drag, with imports outstripping exports. On the supply side, real GVA growth of 7.3 percent is driven by a dynamic services sector, a resilient agricultural sector, and a revival in manufacturing activity,” the governor said.

“Looking ahead, sustained dynamism in the services sector, GST rationalization, good rabi prospects, monetary easing and benign inflation environment should support private consumption. Investment activity, supported by strong capacity utilization, favorable financial conditions, healthy financial institutions and corporate balance sheets, solid credit growth and continued government drive to sustain capital expenditure, is expected,” he said.

Governor Malhotra said robust domestic demand is expected to attract new private sector investment and services exports are likely to remain strong, while goods exports may benefit from a possible trade deal with the United States. The comprehensive trade pact with the European Union, along with agreements with New Zealand and Oman, is expected to help diversify exports and strengthen the foreign sector, he said.

The RBI also pointed to challenges such as geopolitical tensions, an uncertain global trade environment, volatility in global financial markets and fluctuating international commodity prices that continue to pose risks to the economic outlook.

The governor said domestic inflation and growth prospects remain positive and the Indian economy remains resilient despite a turbulent geopolitical scenario. He said improved business performance, sustained momentum in the informal sector will boost manufacturing.

These estimates are in line with what the Economic Survey 2025-26 indicated. The survey projects real GDP to grow by 7.4 per cent in FY26. It estimated India’s GDP growth for 2026-27 to be between 6.8 and 7.2 per cent. It suggested the economy could maintain growth close to trend levels next year. The Survey also put India’s medium-term growth potential at around 7%, saying the economy can sustain this pace if reforms continue and investment remains strong.

(More to be added)