RBI Governor Statement Details Policy Stance Amid Global Challenges

The Reserve Bank of India (RBI) on April 8, 2026, addressed the market regarding the economy's outlook, noting that global economic conditions are facing unprecedented challenges stemming from geopolitical tensions, the conflict in West Asia, and disruptions in global supply chains.

During the Monetary Policy Committee (MPC) meeting held from April 6 to 8, the MPC unanimously voted to keep the policy repo rate under the Liquidity Adjustment Facility (LAF) unchanged at 5.25 per cent. Consequently, the standing deposit facility (SDF) rate remains at 5.00 per cent, while the marginal standing facility (MSF) rate and the Bank Rate stand at 5.50 per cent. The MPC also opted to maintain a neutral stance.

The RBI noted that although headline inflation remains contained and below the target, upside risks persist due to increased energy price pressures and probable weather disturbances affecting food prices. Core inflation pressures are reported as muted, though the future inflation trajectory is deemed uncertain due to supply chain dislocations and the risk of second-round effects.

Economic Outlook and Sectoral Performance​

Regarding economic momentum, high frequency indicators up to February 2026 suggest continued strong activity, supported by robust private consumption and investment demand. However, the West Asia conflict is anticipated to impede growth, as higher input costs from energy price increases and international freight and insurance costs, coupled with supply-chain disruptions, could impair growth. The RBI acknowledged the Government's measures aimed at supporting exports and protecting supply chains to mitigate these adverse impacts.

The assessment of growth indicates that real GDP growth for 2025-26 is estimated at 7.6 per cent based on the new GDP series (base year 2022-23). Looking ahead, while the services sector's momentum and the impact of GST rationalization are expected to support economic activity, the outlook for 2026-27 projects real GDP growth at 6.9 per cent, with quarterly projections of 6.8 per cent in Q1, 6.7 per cent in Q2, 7.0 per cent in Q3, and 7.2 per cent in Q4.

For the agricultural sector, while India's overall macroeconomic fundamentals are viewed as resilient, merchandise exports are projected to be impacted by disruptions to key shipping routes and rising freight and insurance costs.

Inflation Projections​

On the inflation front, the forecast for CPI inflation for 2026-27 is set at 4.6 per cent, with quarterly estimates of 4.0 per cent in Q1, 4.4 per cent in Q2, 5.2 per cent in Q3, and 4.7 per cent in Q4. Core inflation is projected at 4.4 per cent, indicating underlying price pressures are expected to remain contained when precious metals are excluded.

External Sector Summary​

The external sector saw merchandise imports record a double-digit growth of 22.2 per cent in January-February 2026, primarily driven by higher gold imports. Conversely, merchandise exports contracted by 0.2 per cent year-on-year during the same period. Net services exports grew by 4.1 per cent in February 2026. India's inward remittance receipts reached US$ 37.8 billion in Q3:2025-26. As of April 3, 2026, India's foreign exchange reserves stood at US$ 697.1 billion.

The RBI emphasized that the overall external sector indicators remain favorable, pointing to expected robustness in services exports and inward remittance receipts in Q4:2025-26 to keep the current account deficit moderate.

Liquidity and Stability Measures​

System liquidity, measured by the net position under the Liquidity Adjustment Facility (LAF), registered an average daily surplus of ₹ 2.3 lakh crore since the last MPC meeting. The RBI reaffirmed its commitment to proactive liquidity management.

In terms of financial stability, system-level parameters for both Scheduled Commercial Banks (SCBs) and NBFCs were noted as remaining healthy. Bank credit growth was recorded at 13.8 per cent year-on-year as on the fortnight ended March 15, 2026.

Governance and Market Development​

To promote ease of doing business, the RBI proposed three measures:

1. Revising and rationalizing matters requiring the Bank Board's attention after a comprehensive review of existing instructions.
2. Consolidating supervisory instructions, following a similar exercise that grouped over 9000 regulatory instructions into 238 Master Directions.
3. Dispensing with the due diligence requirement when onboarding Micro, Small, and Medium Enterprises (MSMEs) on TReDS platforms.

Additionally, two measures related to capital adequacy were proposed: removing the condition regarding NPA provisioning for inclusion of quarterly profits in CRAR computation, and dispensing with the requirement to maintain an Investment Fluctuation Reserve (IFR). For the money market, the RBI decided to permit additional categories of non-bank entities, beyond banks and standalone primary dealers (SPDs), to participate in the term money market, alongside enhancing the borrowing limit for SPDs.

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