It is even clearer that there will be a slowdown in economic growth in FY27.In its April policy, the RBI has projected a real GDP growth of 6.7 per cent for FY27. India Ratings and Research also expects GDP growth to decline to 6.7 per cent in FY27 from 7.6 per cent in FY26, amid higher fuel and food prices due to the West Asia conflict and the likely impact of evolving El Niño on agriculture from mid-2026. “A USD 10 per barrel increase in crude oil price could reduce GDP growth by 44 basis points, while a 10 per cent reduction in government capex (both union and state governments) could lower GDP growth to 6 per cent,” stated Megha Arora, Economist and Director, Public Finance, India Ratings.
If one takes cues from the RBI governor, it is quite possible that the central bank may adopt a cautious approach. As it does so, the RBI will be watching keenly how the inflation risk accelerates. Well, the central bank has a tough job on its hands.
