The Reserve Bank of India (RBI) has retained its real GDP growth forecast for 2025-26 at 6.5 per cent. stating that the Indian economy remains resilient despite global uncertainties. Analysts said the move reflects the central bank’s confidence in the domestic economy’s resilience, while also acknowledging rising external risks such as tariff-related uncertainties and global trade tensions.
The growth estimate comes with quarterly projections of 6.5 per cent in Q1, 6.7 per cent in Q2, 6.6 per cent in Q3, and 6.3 per cent in Q4 of FY26. For Q1 of FY27, growth is projected at 6.6 per cent.
RBI sees multiple tailwinds supporting growth
The RBI believes that several factors are helping support growth, including above-normal monsoon, easing inflation, rising capacity utilisation, and favourable financial conditions. Supportive government policies—monetary, regulatory, and fiscal—along with sustained public investment are expected to boost economic activity further.
However, the RBI also flagged risks to the outlook, including uncertain external demand, tariff announcements, and prolonged geopolitical tensions that could increase volatility in global markets.
RBI said, “Domestic growth remains resilient and is broadly evolving along the lines of our assessment.” “Prospects of external demand, however, remain uncertain amidst ongoing tariff announcements and trade negotiations,” It noted.
Kotak AMC sees hawkish undertone in RBI commentary
Abhishek Bisen, Head of Fixed Income at Kotak Mahindra AMC, said “The commentary was neutral to hawkish with GDP growth maintained at 6.5 per cent for FY26 and inflation projection of 4.40 per cent for Q4FY26 and 4.90 per cent for Q1FY27. With this commentary and inflation forecast, the bar of any future rate cut is high, unless growth slows down meaningfully due to factors such as tariff-related uncertainty.”
Experts say RBI pause reflects confidence in easing inflation
While The RBI paused the cut in repo rate at 5.5 per cent and retained the policy stance to ‘Neutral’, it has lowered the inflation forecast to 3.1 per cent from 3.7 per cent.
“Growth is robust and as per projections, though it is below our aspirations. The uncertainties of tariffs are still evolving. Monetary policy transmission is continuing. The impact of the 100 bps rate cut since February 2025 on the economy is still unfolding,” the Governor said.
Rate pause expected amid global uncertainties: Elara Capital
Garima Kapoor, Economist and Executive Vice President at Elara Capital, said the pause was expected due to global uncertainties. “On the inflation front, despite 60 bps undershooting of the inflation projection for FY26, RBI assessed this as largely led by volatile food items. Though we expected MPC to cut rates amid soaring tariff-related uncertainties and easing inflation dynamics, today’s decision to maintain the pause may also be suggestive of MPC keeping its powder dry, should things worsen on the trade and tariff front.
PHDCCI hails RBI’s move, says it supports growth amid global headwinds
Hemant Jain, President of PHDCCI, welcomed the central bank’s move, saying, “We appreciate the RBI MPC decision to maintain the status quo on the policy repo rate at 5.5 per cent. This will boost India’s growth despite tariff-related volatilities.”