RBI Governor Malhotra Upgrades India’s Growth Outlook: Q2 GDP Forecast Set at 7%

Market snapshot: The Reserve Bank of India's Monetary Policy Committee (MPC) concluded its February 2026 review by maintaining a status quo on the repo rate at 5.25% while upwardly revising the growth trajectory for the upcoming fiscal year. Governor Sanjay Malhotra highlighted India's resilience amidst global trade volatility, buoyed by significant trade pacts with the US and EU.

Summary: RBI kept the repo rate unchanged at 5.25% and revised GDP projections for Q1 and Q2 FY27 upward to 6.9% and 7%, respectively, reflecting sustained economic momentum.

Key Takeaways

• Repo rate remains steady at 5.25% with a 'Neutral' stance maintained.
• FY27 growth outlook improved with Q1 revised to 6.9% (from 6.7%) and Q2 to 7.0% (from 6.8%).
• FY26 full-year GDP growth projection nudged higher to 7.4%.
• New consumer protection framework proposed to compensate fraud victims up to ₹25,000.

SAHI Perspective

The RBI’s decision to hold rates while upgrading growth forecasts suggests a 'Goldilocks' scenario for the Indian economy. By keeping the stance neutral, the central bank retains flexibility to address potential inflationary spikes from global commodity volatility while acknowledging the domestic strength provided by the recent India-US trade agreement. Investors should note the hardening of G-Sec yields, which mirrors global trends despite benign domestic inflation.

Closing Insight

India remains the world's fastest-growing major economy, with the RBI's updated forecasts signaling that the current growth cycle has more room to run supported by fiscal discipline and trade tailwinds.

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