RBI gives good news to the public. Interest rates to come down

During the latest Monetary Policy Committee meeting, the Reserve Bank of India (RBI) announced several significant decisions. Apart from approving a 25-basis-point reduction in the repo rate, the RBI also revised the country’s GDP growth projections upward. The central bank gave detailed insights into the expected economic growth for the coming years.

The RBI increased India’s GDP growth forecast for the financial year 2025–26 from 6.8% to 7.3%. The strong GDP growth of 8.2% recorded during the July–September quarter played a major role in this revision. Officials noted that the reduction in GST rates boosted consumer demand, resulting in the highest GDP growth in six quarters. India achieved an overall GDP growth of 6.5% in the financial year 2025.

The three-day Monetary Policy Committee meetings concluded on Friday, after which the RBI released the updated GDP projections.

For the financial year 2026, GDP growth for Q3 has been revised from 6.4% to 7%, and for Q4 from 6.2% to 6.5%.
For FY 2027, the RBI raised the Q1 estimate from 6.4% to 6.7%, while Q2 growth is expected to be around 6.8%.

RBI Governor Sanjay Malhotra stated that revisions in income tax and GST rates, lower crude oil prices, increased capital expenditure, and favourable economic conditions contributed significantly to stronger growth during the first half of the year.

He added, “The GST rate cuts and the festive season supported higher GDP growth during October–November. The economy performed better than expected. With 8.2% growth in the July–September quarter, India recorded its highest expansion in six quarters. The reduction in GST duties boosted consumer demand and played a crucial role in driving growth.”