Reserve Bank of India Governor Sanjay Malhotra on Wednesday raised the central bank’s real GDP growth projection for the current financial year 2026-27 by 40 basis points to 7.1 per cent, citing the resilience of domestic economic activity despite global headwinds.
Announcing the outcome of the RBI Monetary Policy Committee meeting, Malhotra said geopolitical tensions, elevated international commodity prices, additional frictions in global trade and tightening global financial conditions could weigh on India’s growth outlook.
“Taking all these factors into consideration, real GDP growth for this year is projected at 7.1 per cent, with Q2 at 7.2 per cent, Q3 at 6.9 per cent and Q4 at 6.8 per cent,” Malhotra said.
He said the 40-basis-point upward revision reflected the strength of economic activity despite significant global challenges.
The RBI Governor said India’s real GDP growth stood at 7.8 per cent in the first quarter of FY27, supported by resilient private consumption and strong investment activity, which recorded an increase of nearly 12 per cent. The contribution of net exports also remained positive.
“We exhibited resilience amidst global headwinds, as evident from real GDP growth of 7.8 per cent in Q1,” Malhotra said.
He said high-frequency indicators for the second quarter suggested that economic activity was maintaining momentum, although with some moderation compared with the previous quarter.
Manufacturing activity has remained steady despite cost pressures, while services sector activity has stayed broad-based, supported by higher domestic and external demand. Both manufacturing and services Purchasing Managers’ Indices (PMIs) remained in the expansionary zone in Q2, although the pace of expansion slowed from Q1.
Private consumption remained broadly resilient, supported by discretionary spending, while fixed investment continued to remain strong.
However, Malhotra said some weakness was visible in non-durable goods consumption and domestic air passenger traffic.
Merchandise exports registered double-digit growth during July and August, supported by efforts to expand market access and diversify export destinations. Services exports also recorded accelerated growth during the two months.
Looking ahead, Malhotra said global economic uncertainty and supply chain disruptions could affect domestic economic activity. He added that a weak southwest monsoon and strong El Niño conditions could affect the upcoming Rabi season and rural demand.
He said continued infrastructure spending, a rebound in private capital expenditure and strong credit flows are expected to support investment activity. Services exports are expected to remain buoyant, while recently operationalised bilateral trade agreements are expected to support merchandise exports.
Published: Wednesday, 7 October 2026 | 1:45 PM IST