RBI Cuts India’s FY27 GDP Growth Forecast to 6.6% From 6.9% Earlier 

The Reserve Bank of India on Friday cut its forecast for India’s GDP growth in the current financial year to 6.6% from 6.9%, driven by a rise in energy and other input prices and a below-normal southwest monsoon.

At 6.6%, GDP growth in 2026-27 will be sharply lower than the estimated 7.6% in 2025-26 and the slowest in at least four years.
“Going ahead, the rise in prices of energy and other inputs, coupled with supply disruptions, is likely to weigh on economic activity,” RBI Governor Sanjay Malhotra said while announcing the Monetary Policy Statement. “Additionally, the projected deficiency in the southwest monsoon will have implications for agricultural production and rural demand.”

The India Meteorological Department has forecast the southwest monsoon to be below normal at 90% of the long-period average.
The Monetary Policy Committee of the RBI, which kept the policy repo rate unchanged at 5.25%, cut its projections for GDP growth in all four quarters of 2026-27. It cut the forecast for April-June to 6.6% from 6.8%, for July-September to 6.3% from 6.7%, for October-December to 6.5% from 7.0%, and for January-March to 6.8% from 7.2% earlier.

Prolonged global supply chain disruptions, volatility in financial markets, and weather-related shocks continue to pose downside risks to the growth outlook, the RBI said.

High-frequency indicators suggest that domestic economic activity remains largely steady since the outbreak of the conflict, with India’s manufacturing and services PMI continuing to be resilient and business expectations remaining positive, the governor said.

On the demand side, private consumption has remained resilient so far, aided by discretionary spending, the governor said. Fixed investment has also maintained its momentum despite cost pressures.

Overall, the economic situation has broadly exhibited resilience and withstood the conflict spillovers, although the impact of cost pressures is becoming visible, Malhotra said.

The MPC was of the opinion that there are considerable risks to the baseline assessment of inflation and growth due to the uncertainty about the duration and intensity of the conflict in West Asia, the magnitude of its spillover effects, and the pace of restoration of supply chains, Malhotra said.

Additionally, the food outlook remains uncertain due to the subnormal southwest monsoon forecast and El Niño. Although risks of higher inflation have amplified, the MPC felt it would be prudent to wait for greater clarity to emerge.