'PM Modi's Reforms Will Offset Tariff Impact': RBI Underlines India's Resilient Growth Outlook
'PM Modi's Reforms Will Offset Tariff Impact': RBI Underlines India's Resilient Growth Outlook
RBI Governor Sanjay Malhotra on Wednesday said tariff-related developments are likely to decelerate growth in the second half of this fiscal, but GST and other policy reforms announced by Prime Minister Narendra Modi recently will offset impact of external factors on economic growth to some extent.
He also announced that the RBI has revised upwards its GDP forecast for FY26 to 6.8%, from 6.5% earlier.
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Announcing the fourth bi-monthly policy review of FY26, Malhotra said, “Economic growth outlook remains resilient helped by favourable monsoon, lower inflation and monetary easing… Domestic economic activities continue to sustain momentum in 2nd quarter of this fiscal."
He added that growth-inducing policy reforms announced by PM will counter the adverse effects of tariff.
“The implementation of several growth-inducing structural reforms, including streamlining of GST are expected to offset some of the adverse effects of the external headwinds," the RBI governor said.
Economic growth outlook remains resilient helped by favourable monsoon, lower inflation and monetary easing, he added.
“Software and service export is robust," Malhotra said, adding that the external sector is resilient and we are confident of meeting our commitments.
On forex reserves, the RBI governor said India's forex reserves at $700.2 billion are enough to cover 11 months of imports.
He also added that strong remittance is expected to keep current account deficit sustainable in current fiscal.
On inflation, the RBI governor said, “The Indian economy remains poised to register high growth. Sobering inflation supports monetary policy to support growth."
The central bank now projects inflation at 2.6% for FY26, lower than the earlier estimate of 3.1%.
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“Looking ahead, an above normal monsoon, good progress of kharif sowing and adequate reservoir levels have further brightened prospects of agriculture and rural demand. Buoyancy in services sector coupled with steady employment conditions are supportive of demand, which is expected to get a further boost from the rationalisation of GST. Rising capacity utilisation, conducive financial conditions, and improving domestic demand should continue to facilitate fixed investment," Malhotra said.
The Reserve Bank of India's (RBI) monetary policy committee (MPC) has kept the key repo rate unchanged at 5.5% in its October bi-monthly monetary policy review, Malhotra announced on Wednesday. The decision has been taken unanimously, while the RBI MPC's policy stance remains ‘neutral'.
Source: News18
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