India's growth seen moderating to 6.9% in FY27 amid global risks: RBI Governor

India’s economic growth is expected to moderate to 6.9% in the current financial year, the Reserve Bank of India said on Wednesday, as rising global uncertainties and supply disruptions weigh on activity despite strong domestic fundamentals.

RBI Governor Sanjay Malhotra said real GDP growth for the previous year was estimated at 7.6% under the new GDP series, reflecting “strong momentum” driven by robust consumption and investment, supported by policy measures, structural reforms and favourable financial conditions.

However, he flagged emerging headwinds, particularly from elevated energy and commodity prices and disruptions to input supplies linked to tensions in West Asia, including the Strait of Hormuz.

“Going forward, elevated energy and other commodity prices and shocks to availability of inputs due to disruptions in the Strait of Hormuz are likely to impact growth this year,” Malhotra said.

The central bank projected quarterly growth at 6.8% in April-June, 6.7% in July-September, 7.0% in October-December and 7.2% in January-March.

The RBI said private consumption would be supported by discretionary spending, with rural demand remaining robust and likely to improve further due to favourable agricultural conditions and a healthy labour market.

On the supply side, the services sector is expected to maintain strong momentum, while manufacturing and other sectors show resilience based on leading indicators and business sentiment.

Agricultural prospects remain favourable due to healthy reservoir levels, Malhotra said.

On the external front, merchandise exports could face pressure from disruptions to key shipping routes, higher freight and insurance costs and softer global demand due to geopolitical tensions. However, some support may come from recently signed trade agreements, several of which are being implemented.

Services exports are expected to remain resilient, the RBI said.

Malhotra cautioned that risks to the growth outlook are “tilted to the downside,” citing the possibility of further escalation in the West Asia conflict, heightened global financial market volatility and adverse weather events.

“Uncertainty remains elevated,” he said, even as a ceasefire currently holds in the region.