In the first monetary policy announcement of the fiscal year, Reserve Bank of India (RBI) Governor Sanjay Malhotra revised India’s GDP growth projection for 2025-26 to 6.5%, down from his earlier estimate of 6.7%. According to the latest forecast, GDP is expected to grow by 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4.
Governor Malhotra attributed the downward revision to increasing global uncertainties, particularly those stemming from trade tensions sparked by recent tariff measures announced by U.S. President Donald Trump.
“Uncertainty, by nature, weighs on growth by impacting the investment and spending decisions of both businesses and households. Trade frictions are likely to weaken global economic activity, which in turn will affect India’s growth,” Malhotra noted.
He added that higher tariffs are expected to negatively impact India’s net exports, although the country maintains relatively lower tariff levels compared to others. The actual impact will depend on trade elasticities and domestic policy responses. He also emphasized that India is actively engaging with the U.S. administration to address trade concerns through a bilateral agreement.
This revision comes after Governor Malhotra’s February inaugural policy review, where he had estimated GDP growth at 6.7%, with Q1 at 6.7%, Q2 at 7%, and Q3 and Q4 at 6.5% each. At that time, he had remarked that economic risks were “evenly balanced” and expressed optimism for improved economic momentum.
In addition, the RBI cut the repo rate by 25 basis points, bringing it down to 6%—the second consecutive rate cut. The policy stance was also changed from ‘neutral’ to ‘accommodative’, signaling a pro-growth approach amidst global headwinds.
