RBI MPC: Gov Malhotra pegs GDP growth rate at 7.4% this year

RBI Monetary Policy Committee announcements: Governor Sanjay Malhotra, during his MPC announcements on Friday, projected growth rate for 7.4 per cent this year. Imports outpaced exports.  

Gov Malhotra projected an upward revision of 2026-27 Q1 growth at 6.9 per cent and Q2 at 7 per cent. 

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

“Looking ahead, sustained buoyancy in services sector, GST rationalisation, healthy rabi prospects, monetary easing and benign inflation environment should support private consumption. Investment activity, supported by high capacity utilisation, conducive financial conditions, healthy balance sheets of financial institutions and corporates, robust credit growth and government’s continued thrust on capital expenditure, is expected to maintain its momentum,” he said. 

Governor Malhotra said that robust domestic demand is expected to attract fresh investments from the private sector, and that services exports are likely to remain strong, while merchandise exports may benefit from a prospective 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 external sector, he said.

The RBI also flagged 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 that domestic inflation and growth outlook remain positive, and the Indian economy remains resilient despite a turbulent geopolitical scenario. He said that improving corporate performance, sustained momentum in informal sector will boost manufacturing. 

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

(More to be added)