On February 6, 2026, RBI Governor Sanjay Malhotra announced that the Reserve Bank of India has revised its real GDP growth forecast for FY26 (2025–26) upward to 7.4%, up from the previous estimate of 7.3%.
The central bank’s optimistic outlook suggests that India is successfully navigating global headwinds through a combination of landmark trade deals, robust domestic demand, and a resilient services sector.
1. FY26 GDP Growth Revision
The RBI’s Monetary Policy Committee (MPC) revised its growth projections during its final bi-monthly meeting of the 2025–26 fiscal year.
| Period | New Forecast (Feb 2026) | Old Forecast (Dec 2025) | Status |
| Full Year FY26 | 7.4% | 7.3% | ↑ Upward Revision |
| Q1 FY27 | 6.9% | 6.7% | ↑ Upward Revision |
| Q2 FY27 | 7.0% | 6.8% | ↑ Upward Revision |
- Fastest Growing Major Economy: At 7.4%, India continues to outperform all other major global economies, supported by what Governor Malhotra described as a “steady improving trajectory.”
- Economic Survey Comparison: The RBI’s 7.4% peg is notably more bullish than the 6.8%–7.2% range projected in the Economic Survey 2025–26 released earlier in the month.
2. The “Trade Deal” Catalyst
A major driver behind the growth upgrade is the recent success on the international trade front.
- India-US Trade Breakthrough: The recent agreement with Washington—which saw U.S. tariffs on Indian imports cut from ~50% to 18%—is expected to significantly boost merchandise exports in the coming quarters.
- India-EU FTA: The landmark comprehensive trade pact with the European Union has provided a structural cushion, helping India diversify its export destinations and insulate itself from regional geopolitical shocks.
3. Domestic Drivers: Consumption & Investment
Governor Malhotra highlighted several “internal engines” that are keeping the growth momentum strong:
- Private Consumption: Projected to expand by 7% in FY26, bolstered by income tax cuts from the Union Budget 2026 and GST rate rationalization.
- Agricultural Resilience: Robust rabi sowing and healthy reservoir levels suggest a strong performance in the rural economy, which in turn supports rural demand.
- Public Capex: The government’s continued focus on infrastructure—supported by a ₹12.2 lakh crore capex outlay—is effectively “crowding in” private investment.
4. The “New Series” Transition
Investors should note that the current projections are the last to be based on the existing statistical base.
- New GDP & Inflation Series: Governor Malhotra announced that the Ministry of Statistics (MoSPI) will release a new GDP and CPI series (with a revised base year of 2024=100) later in February 2026.
- April Policy Guidance: Consequently, the RBI has deferred the full-year projections for FY27 until the April 2026 policy, as it needs to re-calculate data using the updated series.
Conclusion: A “Goldilocks” Economy
By raising the growth target to 7.4% while projecting a benign 2.1% inflation for FY26, the RBI is signaling that India remains in a “Goldilocks” zone—where growth is high and inflation is under control. Despite global volatility, the central bank’s decision to maintain a “neutral” stance gives it the flexibility to support this 7.4% trajectory throughout the year.
