The Reserve Bank of India (RBI) on Wednesday, April 9, revised its real GDP growth estimate for FY26 to 6.5%, down from the earlier projection of 6.7%. Announcing the decision after the conclusion of the first bi-monthly Monetary Policy Committee (MPC) meeting of the financial year, RBI Governor Sanjay Malhotra highlighted the growing downside risks from global trade tensions and rising protectionism.
“The dent on global growth due to trade restrictions will impede local growth,” Malhotra stated, referring to recent moves by the U.S., including the imposition of 104% tariffs on Chinese goods and a 26% reciprocal tariff on Indian exports.
As per the new quarterly projections:
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Q1 FY26 GDP is expected to grow at 6.5%
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Q2 at 6.7%
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Q3 at 6.6%
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Q4 at 6.3%
Alongside the revised forecast, the RBI has also changed the policy stance from “neutral” to “accommodative.”
What does an accommodative stance mean?
An accommodative stance in monetary policy refers to a strategy aimed at supporting economic growth. Central banks adopt this stance when they want to stimulate the economy—usually by lowering interest rates—so that borrowing becomes cheaper and demand increases.
In contrast:
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A tightening stance involves increasing interest rates to combat inflation by reducing spending and credit.
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A neutral stance implies a wait-and-watch approach, allowing the central bank the flexibility to raise or lower rates depending on how the economic situation unfolds.
With this change in stance, the RBI has signaled that going forward, in the absence of new economic shocks, the Monetary Policy Committee is likely to either maintain the status quo or implement further rate cuts.
It’s important to note that this stance reflects the RBI’s approach to interest rate direction, not necessarily its liquidity management operations, which involve other tools to manage money supply in the banking system.
This change comes in the backdrop of a 25 basis points repo rate cut to 6.00% in today’s meeting—marking the second such reduction after February 2025, when the repo rate was reduced from 6.50% to 6.25%.
Governor Malhotra also emphasized the improved inflation outlook. “On the inflation front, while a sharper-than-expected decline in food prices has given us comfort, we remain vigilant to possible risks from global uncertainty and weather disruptions. The MPC noted that inflation is currently below the target, supported by a huge fall in food prices. Moreover, there is a decisive improvement in the inflation outlook. As per projections, there is now greater confidence of durable alignment of headline inflation with the target of 4% over a 12-month horizon,” he said.
With this revised GDP outlook and dovish policy tone, the RBI appears committed to supporting growth while monitoring evolving global uncertainties.
