India’s economy stays resilient at 7.1%, but rising inflation raises a red flag, says RBI's Sanjay Malhotra
The Indian economy is projected to maintain a growth rate of 7.1% for the year 2026-27. This projection is an increase from the previously estimated 6.7%. RBI governor Sanjay Malhotra noted that inflationary pressures are rising, which could impact the growth outlook. Despite turbulent global conditions, India's economic resilience has been remarkable according to the governor.
India's economy has continued to demonstrate resilience, maintaining a growth forecast of 7.1% for 2026-27, according to RBI Governor Sanjay Malhotra. This projection, which has been raised from 6.7% in August, reflects the country's strong performance amidst challenging global conditions. However, rising inflation poses a significant risk to the outlook.
During the central bank's latest policy meeting, held from October 5-7, the Monetary Policy Committee (MPC) decided to increase the repo rate by 25 basis points to 5.5%. This rate hike, the first in nearly four years, came after a period of rate cuts and reflects the RBI's renewed confidence in the economy's ability to endure some tightening without a major impact on growth.
Malhotra highlighted that inflation is becoming more widespread, with 37% of commodities in the Consumer Price Index (CPI) basket having inflation rates above 4% in August, compared to just 20% in March.
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