Mumbai (Maharashtra) [India], February 20 : Reserve Bank of India (RBI) Governor Sanjay Malhotra has said global growth is expected to be marginally higher in 2026 despite escalating geopolitical tensions and rising trade frictions, while asserting that India's economy remains resilient with improving growth prospects and benign inflation, according to minutes of the February 4-6 meeting of the RBI's Monetary Policy Committee.
Malhotra had noted that global expansion would be supported by a surge in technology-related investments, conducive fiscal and monetary policies, and accommodative financial conditions.
However, he cautioned that inflation outcomes remain uneven across countries, prompting central banks to follow divergent policy trajectories as they near the end of their easing cycles.
"Global investor sentiments are nervous and financial markets remain volatile amid large fiscal stimulus and geopolitical uncertainty," the RBI Governor said.
"The domestic economic activity has remained robust, driven primarily by internal factors. The real GDP growth for 2025-26 is projected to rise by 90 basis points from 6.5 per cent in 2024-25, with the outlook for the following year also expected to stay strong," he said.
He added that growth-supportive measures announced in the Union Budget, along with recent trade agreements with major partners, particularly the European Union and the United States, have brightened the external sector outlook.
"Accordingly, we have increased our projection of real GDP growth by 20 basis points each in Q1 and Q2 of 2026-27. These trade deals will not only strengthen exports and the current account but also bring in higher investments," Malhotra said.
On inflation, the Governor observed that price pressures in November and December 2025 remained low and below the lower tolerance threshold. Headline inflation for 2025-26 is projected at 2.1 per cent, while CPI inflation for Q1 and Q2 of 2026-27 is expected at 4.0 per cent and 4.2 per cent, respectively, close to the target.
Malhotra underscored the importance of inflation composition, noting that excluding precious metals, the inflation outlook is even lower. "Precious metals contribute about 60-70 basis points to inflation. The underlying inflation continues to be low," he said.
Assessing the broader macroeconomic environment, Malhotra said India's medium-term fundamentals, including the external sector, remain "healthy and robust."
"Growth prospects are looking up while the inflation outlook remains broadly unchanged. Given the present state of the economy and its outlook buoyant growth and benign inflation I feel the current policy rate is appropriate," the Governor added.
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