Mumbai: The Indian economy is projected to grow at 7.3 per cent in the current fiscal 2025-26, about a half percentage point higher than previously estimated, RBI Governor Sanjay Malhotra said Friday, announcing the decisions of Monetary Policy Committee.
For Q3 and Q4 2025-26, he projected growth at 7 per cent and 6.5 per cent, respectively. For Q1 and Q2 2026-27, the GDP numbers are projected at 6.7 per cent and 6.8, respectively.
The governor said the domestic economy activity is holding up; with rural demand robust aand urban demand recovering steadily.
On the policy rate front, the MPC announced a 25 basis points reduction in the policy repo rate, bringing it down to 5.25 per cent, in a unanimous decision.
The decision was communicated by RBI Governor Sanjay Malhotra after the conclusion of the three-day Monetary Policy Committee (MPC) meeting held from December 3 to 5.
The governor stated that the MPC undertook a detailed assessment of evolving macroeconomic conditions and future outlook before arriving at the unanimous decision to implement the rate cut with immediate effect.
Announcing the decision, the Governor said, “The MPC met on the 3rd, 4th, and 5th of December to deliberate and decide on the policy repo rate. After a detailed assessment of the evolving macroeconomic conditions and outlook, the MPC voted unanimously to reduce the policy repo rate by 25 basis points to 5.25 per cent, with immediate effect.”
The rate cut follows a phase of strong macroeconomic performance supported by robust GDP growth of 8.2 per cent in the second quarter of the current financial year (six-quarter high) and low levels of inflation.
The RBI governor said strong consumption, GST rationalisation buoyed India’s Q2 GDP numbers.
India’s retail inflation fell sharply to 0.25 per cent in October 2025, marking a record low.
This marks a shift from the last monetary policy announcement on October 1, when the RBI maintained the repo rate at 5.5 per cent.
In that review, the MPC had unanimously decided to keep the policy rate unchanged after meeting on September 29 and 30 and October 1 to assess domestic and global economic conditions.
The latest reduction is expected to provide liquidity support and reinforce momentum at a time when GDP numbers remain strong and inflation continues its downward trajectory. (ANI)
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