Reserve Bank of India (RBI) said in its monetary policy statement. High-frequency indicators available so far suggest that domestic demand remained steady in the first quarter of FY27, supported by robust private consumption and resilient investment activity.
Investment momentum continued to be healthy, as reflected in indicators related to construction, capital goods and bank credit. External demand also remained supportive, with strong growth in services exports complemented by a rebound in merchandise exports.
However, the RBI cautioned that the uncertain global economic environment could weigh on domestic economic activity going forward. Against this backdrop, the central bank raised its FY27 real GDP growth forecast by 10 basis points to 6.7% from 6.6% projected in the June monetary policy review.
The RBI expects the economy to grow 7.0% in the first quarter of FY27, 6.4% in the second quarter, 6.5% in the third quarter and 6.8% in the fourth quarter.
On inflation, the central bank lowered its FY27 Consumer Price Index (CPI) inflation forecast by 10 basis points to 5.0% from the 5.1% estimated in June. It projects inflation to average 5.3% in the first quarter, 4.7% in the second quarter, 5.9% in the third quarter and 5.5% in the fourth quarter.
Looking ahead, the RBI said the impact of El Niño on the temporal and spatial distribution of rainfall remains a key risk, although proactive supply-side measures and adequate foodgrain stocks could help cushion any adverse effects. It also noted that global crude oil prices have remained volatile amid geopolitical developments, clouding the near-term inflation outlook. While underlying inflationary pressures remain broadly contained, the central bank cautioned that higher food, fuel and other input costs could still feed into broader inflation.
