Gross Domestic Product (GDP) of India extended 7.7% in the 2025-26 fiscal year, with the economy growing 7.8% in the fourth quarter (Jan-March 2026) of that fiscal. On June 5, the Reserve Bank of India (RBI) lowered its GDP growth prediction for fiscal 2026-27 to 6.6% and increased its inflation forecast to 5.1% for the same fiscal year.
Gross value added and gross domestic product Gross domestic product (GDP) is the market value of all final products and services produced in a country in a given period of time. Real GVA: It is the measure of economic activity without taxes and subsidies. The indicator increased 7.9% in fiscal year 2025-26.
Monetary Policy Committee of RBI
The Monetary Policy Committee (MPC) of the RBI comprises six members who decide on the repurchase rate (repo rate) under the Reserve Bank of India Act, 1934. The MPC held the repo rate constant at 5.25% and maintained the neutral policy stance on June 5, 2026.
Sectoral Drivers and Opportunities
India’s economy grew in 2025-26 fiscal year on the back of domestic consumption, investment activity, manufacturing, construction and services. The RBI in June 2026 had lowered its GDP outlook for fiscal 2026-27 to 6.6% from 6.9% projected in April, citing concerns from the West Asia conflict, oil prices, supply interruptions and weather uncertainties.
Important information for exams:
- Gross Domestic Product GDP is one of the main casual phrase indicators. It is the measure of the size of an economy.
- Real GVA is a measure of economic output before taxes and subsidies are taken into account.
- Repurchase agreement rate is the rate at which RBI lends short term funds to commercial banks.
- RBI is neutral As there is no clear trend of monetary policy tightening or easing.
Background on inflation and monetary policy
RBI has raised its inflation forecast for FY26-27 to 5.1% from 4.6% anticipated in April 2026. The lowered inflation outlook reflected uncertainties regarding food prices and second round effects.
Sudarshan Sinha
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