Indian economy to stay resilient with 6.9% GDP growth in FY27: RBI

India’s economy is expected to maintain strong growth of 6.9% in fiscal year 2026-27 (FY27) despite challenges from rising crude oil prices and geopolitical tensions in West Asia, according to the Reserve Bank of India’s (RBI) annual report released on Friday. The central bank attributed this resilience to robust macroeconomic fundamentals, including healthy corporate and banking sector balance sheets, government-led capital expenditure, and ongoing trade agreements with key partners. The RBI warned that prolonged conflict in West Asia could pose downside risks, though it emphasized India’s external sector remains stable with $691.1 billion in foreign exchange reserves—enough to cover 11 months of imports. The current account deficit stayed manageable at 1% of GDP through December 2025, even amid merchandise trade deficits and portfolio investment outflows. Inflation is projected at 4.6% for FY27, with the RBI maintaining its 4% target with a ±2% tolerance band. While geopolitical tensions may strain fertilizer and input prices, government stockpiles and buffer management are expected to mitigate risks. Agricultural output faces potential El Niño-related challenges, though positive Indian Ocean Dipole conditions could partially offset adverse effects on monsoon-driven crops. The RBI’s outlook underscores India’s position as the fastest-growing major economy, supported by domestic demand and policy stability. However, near-term risks include supply chain disruptions and corporate earnings pressures from lingering geopolitical tensions.