The Reserve Bank of India (RBI) on December 5 revised GDP growth forecast for the ongoing financial year 2026 to 7.3 percent for current fiscal year, from 6.8 percent earlier.
The inflation forecast for Q3 FY26 was revised to 7 percent from 6.4 percent earlier, and that for Q4 has been revised to 6.5 percent from 6.2 percent.
Real GDP growth for Q1 FY27 has been revised to 6.7 percent and Q2 at 6.8 percent.
Here's what RBI Governor said:
RBI Governor Sanjay Malhotra said manufacturing activity continues to improve. "On the supply side, agricultural growth is supported by healthy kharif crop production, higher reservoir levels and better rabi crop sowing," he added. "We approach the new year with hope and vigour to further accelerate growth in the economy," he said, adding that growth currently presents a 'rare goldilocks situation'.
Globally, contrary to earlier expectations, growth has been relatively strong among evolving geopolitics and trade environment, Malhotra said, adding high Frequency indicators suggest that domestic economic activity is holding up in Q3.
Domestic factors such as healthy agricultural factors, benign inflation and congenial corporate balance sheets should support growth, the governor of the Indian central bank said.
"The global economy is holding up better than expected, though the earlier frontloading of trade is showing signs of normalising. Uncertainty has eased somewhat following the end of the US government shutdown and progress on trade agreements, yet it remains elevated. Global inflation dynamics remain uneven, with inflation trending above target in most major advanced economies. The US dollar strengthened primarily on safe haven demand while treasury yields remained range bound. Equity markets remain volatile, driven by shifting views on the monetary policy outlook and concerns surrounding stretched valuations in tech stocks," he added.
Strong GDP print in Q2:
India’s economy extended its strong run for a third consecutive quarter, growing at a six-quarter high of 8.2 percent in July–September (Q2FY26) compared with 7.8 percent in the previous quarter, helped by robust manufacturing and a buoyant services sector, especially financial, real estate and professional services, according to official data released on November 28.
The print comfortably beat a recent Moneycontrol poll of economists, which had pegged Q2 growth at 7.3 percent, and was well above the Reserve Bank of India’s 7 percent projection for the quarter.
Nominal growth was slower at 8.7 percent--a four quarter low--compared with 8.8 percent in the previous quarter, a phenomenon that economists note can have implications for financial performance.
Also read: Our LIVE blog on RBI MPC updates
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