RBI MPC October 2025: Panel Revises GDP Estimates For FY26 To 6.8%

Notably, ICRA’s Chief Economist Aditi Nayar observed that stronger-than-expected Q1 growth supports the case for holding rates in October.

Meanwhile, international headwinds, particularly US tariff actions and global trade volatility, are also part of the MPC’s calculus.

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Governor Sanjay Malhotra revealed the RBI Monetary Policy Committee (MPC)'s growth expectations for the 2025-26 fiscal year (FY26) on Wednesday. The central bank opted to upgrade its GDP forecast to 6.8 per cent from 6.5 per cent.

Further, the MPC also decided to keep the repo rates unchanged at 5.5 per cent. Real GDP growth for the current year is now expected at 6.8 per cent, compared with the earlier 6.5 per cent estimate. For the quarters ahead, the RBI sees growth at 7 per cent in Q2, 6.4 per cent in Q3 and 6.2 per cent in Q4. Looking ahead to the next financial year, GDP growth for Q1 has been pegged at 6.4 per cent.

The governor highlighted the multiple global and domestic factors shaping India’s growth outlook. He cautioned that “ongoing tariff and trade policy uncertainties will impact external demand, prolonged geopolitical tensions and volatility in international financial markets, caused by the risk of sentiments of investors, pose downside risks to the growth outlook.”

At the same time, Malhotra underscored the role of reforms in bolstering resilience. He noted that “the implementation of several growth-inducing structural reforms, many of which were announced by the PM on August 15, including the streamlining of GST, is expected to offset some of the adverse effects of the external headwinds.”

Despite headwinds from global demand, the governor underlined that India’s growth outlook remains resilient, supported by strong domestic drivers. A favourable monsoon, lower inflation, accommodative monetary policy and the positive impact of recent GST reforms are expected to lend further support. Nevertheless, growth continues to trail national aspirations. Even as the forecast for FY2025-26 has been revised upward, forward-looking estimates for Q3 and beyond are projected slightly lower than earlier, reflecting tariff-related pressures. These, however, are expected to be partially offset by the impetus provided by GST rate rationalisation.

The three-day discussions began on September 29 and concluded today morning. Notably, ICRA’s Chief Economist Aditi Nayar observed that stronger-than-expected Q1 growth supports the case for holding rates in October. Meanwhile, international headwinds, particularly US tariff actions and global trade volatility, are also part of the MPC’s calculus.

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