GDP Growth Forecast Lowered

Mumbai: The RBI’s Monetary Policy Committee (MPC) has reduced its projection for India’s GDP growth in 2025-26 by 20 basis points to 6.5 per cent from 6.7 per cent due to global trade and policy uncertainties in the wake of the US tariff hikes, Reserve Bank of India Governor Sanjay Malhotra said on Wednesday.

The RBI Governor said: “First and forem ost, uncertainty in itself dampens growth by affecting investment and spending decisions of businesses and households. Second, the dent in global growth due to trade frictions will impede domestic growth. Third, higher tariffs will have a negative impact on net exports.”

“However, there are several known unknowns - the impact of relative tariffs, the elasticities of our export and import demand, and the policy measures adopted by the government, including the proposed Foreign Trade Agreement with the US,” he said. This makes the exact quantification of the adverse impact difficult, he pointed out.