RBI: Raises FY27 GDP Growth Forecast by 10 Bps to 6.7%, Sees Balanced Risks

The Reserve Bank of India on Wednesday raised its real GDP growth forecast for 2026-27 by 10 basis points to 6.7%, citing resilient domestic demand, strong government capital expenditure, and healthy momentum across the manufacturing and services sectors despite persistent global uncertainty.

The upward revision marks the second consecutive increase in the central bank's growth forecast and reflects stronger-than-expected economic activity during the opening months of the financial year.

The RBI now expects real GDP growth in April-June at 7.0%, up from the 6.6% estimate made in June. Growth in the July-September is projected at 6.4%, compared with the earlier estimate of 6.3%, while the October–December forecast has been retained at 6.5%. The central bank maintained its January-March growth projection at 6.8% and expects the economy to expand by 7.3% in the April-June quarter of 2027-28.

"Amidst persistent global uncertainty, domestic economic activity has exhibited resilience as reflected by the high-frequency indicators available for April-June 2026-27," RBI Governor Sanjay Malhotra said while presenting the Monetary Policy Committee's resolution after its August 3-5 meeting.

According to the governor, early corporate earnings have indicated healthy growth in the manufacturing sector, supported by expansionary readings in purchasing managers' indices.

"Services activity too maintained its momentum in the wake of strong domestic demand," Malhotra said.

The RBI said private consumption continues to be supported by strong discretionary spending, while investment activity has remained firm because of sustained public expenditure on infrastructure and construction projects.

"Private consumption continued to be driven by buoyant discretionary spending, while investment activity remains steady on the back of robust government spending on infrastructure and construction," Malhotra said.

The central bank said the improved outlook for the first half of the year justified the upward revision in annual growth estimates, highlighting the economy's resilience amid volatile global conditions.

Despite the brighter outlook, the RBI remained cautious and emphasised that uncertainties persist. While the central bank described risks to growth as "evenly balanced", policymakers continue to monitor geopolitical developments, fluctuations in global commodity prices, weather-related disruptions and evolving trade conditions.

The RBI has repeatedly highlighted the possibility that adverse weather events could affect agricultural output and rural demand, while prolonged geopolitical tensions could disrupt trade flows and increase energy costs.

Even so, the central bank appears confident that robust domestic demand and continued public investment will help offset external headwinds.

RBI Real GDP Projections