India’s economic outlook for FY27 remains positive, according to the RBI, although risks from the ongoing West Asia conflict continue to be a concern.
The RBI expects India’s economy to grow by 6.9% in FY27. This is lower than the 7.6% growth recorded in FY26 but remains higher than the IMF’s FY27 forecast of 6.5%.
The central bank said strong domestic demand, rising private consumption, continued investment activity, and healthy corporate and banking sector balance sheets will support economic growth.
Government spending on infrastructure and capital expenditure is expected to remain a major growth driver. The RBI also said trade agreements with key global partners will provide additional support to the economy.
Growth is projected at 6.8% in Q1, 6.7% in Q2, 7.0% in Q3, and 7.2% in Q4 of FY27, indicating stable economic momentum throughout the year.
The RBI warned that a prolonged or wider West Asia conflict could hurt growth by disrupting supply chains, increasing financial market volatility, and pushing up global energy and commodity prices.
Inflation is projected at 4.6% in FY27, remaining within the RBI’s target framework of 4% with a tolerance band of +/- 2%. However, higher oil prices, commodity inflation, exchange-rate volatility, and rising input costs remain upside risks.
The Monetary Policy Committee has kept the repo rate unchanged at 5.25% and retained a neutral policy stance while closely monitoring global developments and inflation risks.
The RBI said India remains one of the fastest-growing major economies. While risks to the outlook are tilted to the downside, strong macroeconomic fundamentals, manufacturing expansion, services sector growth, and continued policy support are expected to sustain economic momentum in FY27.
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