'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.

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.

“GST and other reforms to offset impact of external factors on economic growth to some extent,” 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%.

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’.