RBI Raises FY27 GDP Growth Forecast to 6.7%, Keeps Repo Rate Unchanged

The Reserve Bank of India (RBI) announced its latest monetary policy decisions on August 5, 2026. The Monetary Policy Committee (MPC) kept the repo rate unchanged at 5.25% and retained its neutral stance.

Alongside the policy decision, the central bank revised its FY27 GDP growth forecast upward to 6.7% from 6.6%. The update comes amid resilient domestic economic activity and ongoing global uncertainties.

RBI FY27 GDP Growth Forecast Raised to 6.7%

The RBI increased its GDP growth forecast for FY27 to 6.7%, compared with its earlier estimate of 6.6% announced in June. RBI Governor Sanjay Malhotra stated that the Indian economy performed better than expected during Q1 FY27.

The upward revision reflects stronger-than-anticipated economic momentum in the initial months of the financial year. Industry body ASSOCHAM welcomed the revision, noting that the estimate is close to its own projection of 7%.

RBI Quarterly GDP Growth Projections for FY27 and FY28

The central bank estimated GDP growth at 7% for Q1 FY27. It raised the Q2 FY27 forecast to 6.4% while retaining the Q3 FY27 and Q4 FY27 projections at 6.5% and 6.8%, respectively.

For the next financial year, the RBI projected growth of 7.3% in Q1 FY28. These projections indicate continued economic activity across multiple sectors while accounting for prevailing macroeconomic conditions.

RBI Repo Rate Decision August 2026

The MPC decided to keep the repo rate unchanged at 5.25% during its third bi-monthly meeting of FY27. The committee also maintained its neutral policy stance, signalling a balanced approach towards growth and inflation management. Market participants had closely monitored the outcome of the meeting for guidance on interest rates. The decision was announced on August 5, 2026, alongside updated growth and economic assessments.

What RBI Said About India's Economic Outlook

According to Governor Malhotra, economic growth remains resilient even though the broader outlook is uncertain. The RBI expects services sector momentum, GST rationalisation measures, stable employment conditions, robust credit growth and government infrastructure spending to support economic activity.

These factors are expected to contribute to demand and investment across the economy. At the same time, the central bank highlighted several external and domestic risks that require close monitoring.

Read More: RBI to Begin Polymer Banknote Pilot.

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Conclusion

The RBI's latest policy review resulted in an upward revision of the FY27 GDP growth forecast to 6.7% while leaving the repo rate unchanged at 5.25%. Quarterly growth projections were adjusted for Q2 FY27, while estimates for Q3 FY27 and Q4 FY27 remained unchanged.

The central bank observed that economic performance in Q1 FY27 exceeded expectations and projected 7.3% growth for Q1 FY28. However, it also noted that uncertainties related to energy prices, supply chains, the southwest monsoon, El Niño conditions, geopolitical developments and global trade policies continue to influence the economic outlook.

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