The Reserve Bank of India increased its GDP growth forecast for fiscal year 2026 to 7.6% from 7.3% before, while also emphasising that the West Asia conflict could stymie India's economy. The current financial year's real GDP growth rate is expected to be 6.9%.
Governor Sanjay Malhotra stated that the Indian economy's fundamentals were strong; nevertheless, global macroeconomics continued to impact on domestic growth prospects. He warned that disruptions in the Strait of Hormuz caused by the US-Iran confrontation could have an impact on economy this fiscal year, as supply chain disruptions may damage several vital sectors.
The RBI expects Q1 FY27 GDP growth to be 6.8%, up from 6.7% previously, and Q2 growth to be 6.7%, up from 6.8% earlier. GDP is expected to expand by 7% in the third quarter.In a largely expected action, the RBI announced no adjustment in the repo rate amidst heightened global uncertainty caused by US-Iran hostilities and their economic consequences, as oil prices rose and the currency plummeted. The repo rate is the rate at which the RBI loans money to commercial banks.
The declaration came at the conclusion of the Monetary Policy Committee's first three-day meeting of the new fiscal year, held from April 6 to 8. The repo rate has been set at 5.25% following this ruling.The Monetary Policy Committee convened on the 6th, 7th, and briefly this morning to discuss and settle on the policy repo rate.

Following a thorough examination of the changing macroeconomic and financial circumstances and outlook, the MPC unanimously resolved to maintain the policy repo rate at 5.25% under the liquidity facility. As a result, the STF rate remains at 5%, while the MSF and bank rates are both at 5.5%. "The MPC also decided to maintain a neutral stance," said RBI Governor Sanjay Malhotra.
Bloomberg's 33 economists all predicted that the benchmark rate would remain constant.
While inflation stayed within the Reserve Bank's tolerance band, the central bank faces the difficulty of navigating the near-term upward pressure generated by the US-Iran war.According to Malhotra, negative spillovers from global markets could have an influence on domestic financial conditions and raise borrowing costs. He emphasised that rising crude prices could increase inflation and expand the CAD, while core inflation pressures remain subdued.
The revised CPI data shows that consumer price inflation increased to 3.21% in February from 2.75% in January, including rises in food and precious metal prices. While the level remains below the 4% target, cost pressures are starting to build.
Malhotra stated that data through February showed ongoing strong economic activity and that the government had taken steps to alleviate the negative impact of the West Asia war.