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The Reserve Bank of India on Friday raised its growth projections for the first half of the 2026-27 fiscal year. Governor Sanjay Malhotra said the economy is likely to expand 6.9% in the first quarter and 7 per cent in the second, up from the 6.7 per cent and 6.8 per cent projected in December.

However, the central bank did not give a forecast for the full year. “We are deferring the full-year projection to the April policy, when the new GDP series will be released,” Malhotra told reporters. He added that the risks to growth are evenly balanced.

For 2025-26, the RBI expects real GDP growth of 7.4 per cent, higher than the previous year. Gross Value Added (GVA) growth is estimated at 7.3 per cent, supported by services and a rebound in manufacturing.

Malhotra highlighted the India-EU free trade agreement and a potential deal with the US as factors that could support exports. Still, net external demand remains a drag, with imports outpacing exports.

Private consumption and investment are driving growth. Rural demand is steady, helped by healthy crop output and improving labour markets. Urban demand is expected to rise, supported by GST rationalisation and easy financing conditions.

Investment activity is likely to pick up, driven by high capacity utilisation, faster credit growth, and government infrastructure spending. Budget measures announced earlier will also support growth.

Agriculture is expected to benefit from good reservoir levels and strong rabi sowing. Manufacturing is likely to gain from better corporate performance and continued informal sector activity. Construction growth is projected to remain steady, while services are expected to stay resilient. Preliminary data from high-tech companies suggest business activity is improving, supporting the RBI’s positive near-term view.

The RBI revised its short-term growth projections upward but will provide full-year guidance in April after the new GDP series is released.