Reserve Bank has cut India’s growth forecast to 6.5 per cent from 6.7 per cent estimated earlier for the current financial year on account of impact of global trade and policy uncertainties.
Prospects of agriculture sector remain bright on the back of healthy reservoir levels and robust crop production in 2025-26, RBI Governor Sanjay Malhotra said while unveiling the outcome of the first bi-monthly Monetary Policy Committee meeting for the current financial year.
Manufacturing activity is showing signs of revival with business expectations remaining robust, while services sector activity continues to be resilient, he said.
Investment activity has gained traction and it is expected to improve further on the back of sustained higher capacity utilisation, government’s continued thrust on infrastructure spending, healthy balance sheets of banks and corporates, along with the easing of financial conditions, he said.
“Merchandise exports will be weighed down by global uncertainties, while services exports are expected to remain resilient.
Further, The Reserve Bank of India (RBI) cut interest rates for a second consecutive time and signalled more easing to come as it sought to bolster the economy in face of further pressure from damaging US tariffs.
The Monetary Policy Committee (MPC), consisting of three central bank members and an equal number of external members, voted unanimously to cut the repurchase or repo rate by 25 basis point to 6 per cent.
It had reduced rates by an equal measure in February — the first cut since May 2020.
The move lowers borrowing costs to the lowest level since November 2022, amid easing inflation and a fall in oil prices.
RBI changed its policy stance to “accommodative” from “neutral”, indicating possibility of more rate cuts in future, Governor Sanjay Malhotra said announcing the MPC decisions.
The rate cut came on a day when the full 26 per cent additional tariffs on Indian goods exported to the US came into effect.
The US tariffs exacerbate uncertainties, with some economists predicting a 20-40 basis point drag on Indian GDP growth in the current fiscal year that started on April 1.
