June 5 : The Reserve Bank of India’s Monetary Policy Committee decided to keep the policy repo rate unchanged at 5.25 per cent while retaining a neutral monetary policy stance. “Although inflation remains within the target range of plus/minus 4 percentage , geopolitical risks affecting global supply-chain have increased dampening GDP growth prospects for FY2027 but Indian economy still remains resilient with strong domestic demand”, says Mr. Rajeev Juneja, President, PHDCCI.
Intensified global volatility has led to disruptions in energy supplies, higher commodity prices, and increased uncertainty across international financial markets. Despite these external challenges, the Indian economy continues to demonstrate resilience, supported by robust domestic consumption and healthy corporate and banking sector balance sheets, he added.
According to projections, India’s real GDP growth is expected to moderate from an estimated 7.6 per cent in FY 2025-26 to 6.9 per cent in FY 2026-27 with Q1 at 6.8 per cent; Q2 at 6.7 per cent; Q3 at 7.0 per cent; and Q4 at 7.2 per cent.
While domestic demand remains supportive, high energy prices, logistics disruptions, and potential monsoon-related risks are expected to weigh on economic activity during the coming year.
According to India Metrological Department the southwest monsoon seasonal rainfall over the country as a whole is likely to be 90% of the Long Period Average (LPA) with a model error of ±4%, indicating that below normal rainfall is most likely over the country as a whole during the monsoon season (June to September), 2026.
Consumer price inflation is projected at 4.6 per cent for FY 2026-27, compared with a relatively benign inflation environment during the previous year but within the RBI range. CPI inflation for 2026-27 is projected to be at 4.6 per cent with Q1 at 4.0 per cent; Q2 at 4.4 per cent; Q3 at 5.2 per cent; and Q4 at 4.7 per cent.
To attract foreign capital RBI also announced slew of measures necessary to enhance foreign capital inflows. The scope of the Fully Accessible Route for government securities has been expanded by including all new 15-, 30-, and 40-year G-sec issuances, while investment restrictions for FPIs under the General Route have been eased.
Investment limits for NRIs, OCIs, and other resident-outside-India individuals in listed equities have been increased. To encourage foreign currency inflows, concessional forex swap facilities have been introduced for PSU ECBs and FCNR deposits until September 30, 2026. Export proceeds realization timelines are restored to nine months.
Current challenges largely represent a supply shock rather than demand-driven inflation consequently RBI has retained a neutral stance, but with flexibility to respond to future changes in economic conditions as new data becomes available.
“The policy reflects a balanced view of upside risks facing the economy. While external uncertainties have increased, RBI’s continued focus on preserving financial stability, supporting growth and creating a conducive environment keep medium to long term growth prospects intact”, said Dr. Ranjeet Mehta, CEO & Secretary General, PHDCCI