The Reserve Bank of India (RBI) has revised its real GDP growth forecast for fiscal year 2026 (FY26) upwards to 7.4%, from the earlier projection of 7.3%. This decision was announced on February 6, 2026, following the Monetary Policy Committee (MPC) meeting. The central bank also revised upwards its GDP growth projections for the first half of fiscal year 2027 (FY27), with Q1 growth now projected at 6.9% (up from 6.7%) and Q2 growth at 7.0% (up from 6.8%).

The RBI's MPC, led by Governor Sanjay Malhotra, decided to keep the repo rate unchanged at 5.25%, maintaining a neutral stance. This is after a 25 bps cut in the December meeting. The MPC's decision to hold rates steady reflects confidence in a softening inflation outlook and improving growth prospects. The last bi-monthly policy meeting for FY26 was held from February 4 to February 6. Since February 2025, the RBI has cumulatively cut the repo rate by 125 basis points.

The central bank expects economic activity to hold up well in FY27. The upward revision of the GDP growth forecast reflects a reassessment of economic momentum, influenced by recent trade agreements and overall macroeconomic stability. The MPC noted that strong growth momentum is evident in underlying data, with economic activity remaining resilient. The government's first advance estimates also suggest continuing growth momentum driven by domestic factors.

While the RBI has upgraded its growth outlook, it has also slightly revised its CPI inflation projection for FY26 to 2.1%, from 2.0% earlier. Specifically, the inflation estimate for Q4 FY26 has been increased to 3.2% from 2.9%. For FY27, the CPI inflation projections for Q1 and Q2 have also been revised upwards to 4.0% and 4.2% respectively. According to the RBI, the slight upward revision in the inflation outlook is mainly due to increases in the prices of precious metals. However, the underlying inflation continues to be low.

The RBI has been closely monitoring inflation, which accelerated to 1.33% in December 2025. Despite this increase, it remains below the RBI's tolerance band of 2%–6%. India's GDP grew by 8.2% in the September quarter. The recent Union Budget, which boosted government spending, and trade deals between the US and India, have raised expectations of stronger economic growth. The central bank has set a consumer inflation target of 4 percent, with a band of plus or minus 2 percentage points.