The Reserve Bank of India (RBI) on Friday, 5 June 2026 projected real GDP growth for 2026-27 at 6.6 per cent, even as prolonged global supply chain disruptions, financial market volatility, and weather-related shocks continue to cloud the domestic outlook. The projection was announced by RBI Governor Sanjay Malhotra following the conclusion of the three-day Monetary Policy Committee (MPC) meeting in Mumbai.

Quarterly Growth Breakdown

The central bank's growth forecast is distributed across quarters as follows: Q1 at 6.6 per cent, Q2 at 6.3 per cent, Q3 at 6.5 per cent, and Q4 at 6.8 per cent. Governor Malhotra noted that India's manufacturing and services Purchasing Managers' Index (PMI) indicate continued resilience in both sectors, with business expectations remaining broadly positive.

'On the demand side, private consumption, aided by discretionary spending, has remained resilient so far. Fixed investment has also maintained its momentum despite cost pressures. Merchandise exports recorded strong growth in April 2026, notwithstanding elevated freight and insurance costs,' Malhotra said in his address.

Inflation Outlook and Upside Risks

The RBI pegged CPI inflation for 2026-27 at 5.1 per cent, with a quarter-by-quarter path of Q1 at 4.2 per cent, Q2 at 5.1 per cent, Q3 at 5.9 per cent, and Q4 at 5.4 per cent. Core inflation is projected at 4.7 per cent for the full year. Malhotra acknowledged that while headline inflation is expected to firm up toward the upper tolerance level in Q3, the supply shock impact is expected to ease from Q4 onwards.

'The underlying inflation pressures continue to remain benign at this juncture,' Malhotra said, while flagging that second-round effects — through wages and expectations — remain a 'distinct possibility, warranting a close vigil.'

Monsoon and El Nino Concerns

A sub-normal south-west monsoon forecast and El Nino risks add further uncertainty to the inflation trajectory, according to the Governor. However, Malhotra offered a measure of reassurance, noting that adequate foodgrain stocks and satisfactory reservoir levels 'provide some comfort' against the worst-case scenarios.

The forecasts are subject to upside risks from global commodity price shocks and uncertainty about the spatial and temporal distribution of the monsoon, the RBI said.

Services Exports and Global Spillovers

Services exports are holding up despite concerns around artificial intelligence disrupting demand patterns, the Governor noted. 'Overall, the economic situation has broadly exhibited resilience and withstood the conflict spillovers, although the impact of cost pressures is becoming visible,' Malhotra said. This comes amid a broader global environment where trade fragmentation and geopolitical tensions have kept freight and insurance costs elevated — factors that the RBI is closely monitoring for their passthrough effect on domestic prices.

The RBI's next policy review will be watched closely for any revision to these projections as monsoon data and global commodity trends become clearer in the months ahead.