RBI's real GDP growth forecast for 2026-27, in August and now
RBI raises India's 2026-27 growth forecast to 7.1%
The RBI now expects India's economy to grow 7.1% in 2026-27, up from 6.7% in August. The governor says this 40 bps upgrade shows how strong the economy is. But if you look closer, most of the upgrade has already happened.
Q1 (April to June) grew 7.8%. In August, the RBI had expected just 7.0%. For Q2 (July to September), which just ended, it now expects 7.2%, up from 6.4%. Q3, 6.9%, up from 6.5%. Q4, no change at 6.8%. And Q1 of 2027-28: 7.1%, down from 7.3%.
What's driving this growth? People are spending, companies are investing and exports are booming. In July and August, factory output grew 8.6%, up from 6.9% in Q1. Goods exports rose 22.8% and services exports 13.5%. Bank lending is up 18.1% on a year, against 10.4% a year ago.
What could go wrong? The weak monsoon and a strong El Niño could hurt the winter crop and spending in villages. Some spending is already slowing, as everyday goods output grew just 0.6%, and domestic air travel fell 5.4%. Abroad, there's the West Asia conflict, costly commodities and tighter global money.
The RBI raised its forecast mostly because the last 6 months were strong. Its forecast for April to June 2027 actually went down, to 7.1% from 7.3%.
The RBI raised its growth forecast for the next 2 quarters
India's real GDP growth by quarter: actual, then the RBI's August and October forecasts. From January 2027 on, the 2 forecasts are close.
Real GDP growth on a year earlier, %
Jul to Sep: 7.2%, was 6.4%
Both forecasts start from the 7.8% actual for April to June 2026, which August had put at 7.0%. Full year 2026-27: 6.7% in August, 7.1% now.
RBI, MPC resolutions of 5 August and 7 October 2026; Monetary Policy Report, October 2026 · Q1 2025-26 to Q1 2027-28