The Reserve Bank of India on Friday raised its economic growth projections for the first half of the next financial year, indicating confidence in India’s near-term growth momentum even as global uncertainties persist.

In its latest monetary policy review, the RBI revised real GDP growth for Q1 of FY27 to 6.9% and Q2 to 7%, reflecting an improvement over its earlier estimates. The central bank attributed the upgrade to firm domestic demand, sustained public spending and stable performance in the services sector.

However, the RBI chose to defer its full-year FY27 growth forecast to the April policy meeting, citing the upcoming transition to a revised GDP data series. The move signals a cautious approach as the central bank recalibrates its medium-term outlook using updated statistical benchmarks.

Rates on Hold, Neutral Stance Retained

The Monetary Policy Committee kept the repo rate unchanged at 5.25% and retained its neutral policy stance, underlining the RBI’s intent to balance growth support with inflation management. The decision was widely anticipated by markets, given the absence of major inflationary shocks and stable financial conditions.

The neutral stance suggests that future policy actions will remain data-dependent, with equal emphasis on inflation trends and growth durability.

Inflation Remains Within Comfort Zone

On the price front, the RBI projected inflation to remain broadly stable in the first half of FY27, staying close to the central bank’s medium-term target. While food prices and global commodity movements continue to pose risks, overall inflation conditions were assessed as manageable.

The central bank noted that vigilance would be required as global supply chains, energy prices and financial markets remain sensitive to geopolitical developments.

What’s Supporting Growth?

According to the RBI’s assessment, several factors are underpinning the improved early-FY27 outlook:

• Consistent urban consumption and a gradual pickup in rural demand
• Continued government capital expenditure
• Resilient services exports and steady credit growth

At the same time, the central bank flagged external risks including global economic slowdown concerns, volatile capital flows and trade-related uncertainties.

By revising early-year growth projections while postponing the annual estimate, the RBI has signalled confidence in short-term momentum but caution on the broader outlook. Economists expect the April policy review to provide greater clarity on the growth trajectory once the revised GDP series is fully incorporated.

For now, the RBI appears set to maintain a wait-and-watch approach as it navigates evolving domestic and global conditions.

• FY27 Q1 GDP growth: 6.9%
• FY27 Q2 GDP growth: 7%
• Repo rate: Held at 5.25%
• Policy stance: Neutral
• Full-year FY27 forecast: Deferred to April policy