New Delhi, Aug 5: The Reserve Bank of India (RBI) has projected retail inflation at 5 per cent for FY27, while highlighting that the Indian economy continues to show resilience despite ongoing global uncertainties. RBI Governor Sanjay Malhotra said strong domestic demand, steady investment activity, and healthy exports are providing support to economic growth.
Addressing the media after the Monetary Policy Committee (MPC) meeting, Governor Malhotra said high-frequency economic indicators point towards stable domestic activity in the first quarter of FY27. He noted that private consumption remains strong, while investment momentum continues to be supported by construction activity, capital goods demand, and improved bank credit growth.
The Governor said India’s external sector has also shown strength, with growth in services exports supported by a recovery in merchandise exports. He added that the country’s economic fundamentals remain solid despite challenges from the global environment.
However, Malhotra cautioned that global uncertainties, including volatile energy prices, supply chain disruptions, geopolitical developments, and uneven monsoon conditions, could influence economic activity. The RBI said risks from El Niño conditions and a possible impact on agriculture and rural demand will need to be monitored closely.
The Governor highlighted that various government measures, including promotion of climate-resilient agriculture, crop diversification, and water conservation initiatives, are expected to reduce risks to the farm sector.
He further said that continued growth in services, the impact of GST reforms, stable employment conditions, strong capacity utilisation, and increased infrastructure spending are expected to support urban demand and investment activity.
The RBI noted that manufacturing and services sectors continue to expand, while robust exports and resilient domestic demand are strengthening India’s position as one of the world’s fastest-growing major economies.
On monetary policy, Governor Malhotra said the central bank will continue to assess inflation trends and economic conditions before taking any further action. He emphasized that future policy decisions will depend on the evolving balance between growth and inflation.
With inflation expected to remain manageable and economic activity showing steady momentum, the RBI remains focused on supporting sustainable growth while maintaining price stability.