RBI Revises FY26 GDP Growth Forecast to 6.5%:

On April 9, Reserve Bank of India (RBI) Governor Sanjay Malhotra updated the nation's GDP growth forecast for the fiscal year 2025–26, revising it down to 6.5% from the previously estimated 6.7% announced in February.

Breaking down the revised projections by quarters:

Q1 FY26: 6.5% (earlier 6.7%)

Q2 FY26: 6.7% (earlier 7.0%)

Q3 FY26: 6.6% (up from 6.5%)

Q4 FY26: 6.3% (down from 6.5%)

Global Trade Tensions Affect Outlook

Governor Malhotra emphasized the impact of recent trade policies, particularly tariffs introduced by the United States, which he said have created uncertainty in global markets and dampened investor sentiment.

He noted that these trade frictions are expected to weigh on global economic momentum, which in turn could affect India’s growth prospects. "Higher tariffs will negatively influence net exports, with both known and unforeseen implications," Malhotra added.

Agriculture Sector Outlook Remains Positive

Despite international challenges, Malhotra remained optimistic about India's agricultural performance. Favorable reservoir levels and strong crop yields are expected to support the sector's contribution to the economy.

The RBI's Monetary Policy Committee (MPC) conducted its quarterly review between April 7 and April 9.

Repo Rate Cut by 25 Basis Points

Alongside the growth forecast update, the RBI announced a policy repo rate cut of 25 basis points, bringing it down to 6%.

“After thoroughly evaluating the current economic and financial conditions, the MPC unanimously decided to reduce the repo rate by 25 basis points to 6%, effective immediately,” said Malhotra.

This decision aligns with market expectations, including a Moneycontrol survey of 21 economists predicting a similar rate adjustment ahead of the April policy meeting.

Previous Meeting Recap

In its February meeting, the RBI had forecasted a 6.7% GDP growth for FY26 and had also cut the repo rate by 25 basis points to 6.25%, maintaining a neutral stance amid ongoing global economic challenges.