• The RBI Monetary Policy Committee (MPC) kept the policy repo rate unchanged at 5.25% and maintained a neutral stance, reflecting confidence in the current growth–inflation balance.
• India’s economic growth outlook remains strong. GDP growth for FY 2025–26 is estimated at 7.4%, supported by robust private consumption, services sector strength, and revival in manufacturing activity.
• Growth projections for Q1 and Q2 of FY 2026–27 have been revised upward to around 6.9% and 7.0%, indicating sustained momentum despite global uncertainties.
• Inflation remains well below the RBI’s tolerance band. Headline CPI inflation was very low in November–December 2025, and full-year inflation for FY 2025–26 is projected at about 2.1%.
• Inflation is expected to gradually move closer to the target in FY 2026–27. The recent upward revision in inflation projections is mainly due to higher precious metal prices, while underlying core inflation remains benign.
• The external sector remains resilient. Although the trade deficit widened due to higher imports, strong services exports, remittances, and foreign exchange reserves provide stability.
• Financial system conditions remain sound. Bank credit growth has strengthened, asset quality remains healthy, capital adequacy is comfortable, and liquidity conditions are being actively managed by the RBI.
• Key policy measures announced include:
– Increase in collateral-free loan limit for MSMEs from ₹10 lakh to ₹20 lakh
– Permission for banks to lend to REITs with prudential safeguards
– Regulatory relaxations and capacity-building initiatives for Urban Co-operative Banks
– Exemption of certain small NBFCs from registration requirements
– Measures to enhance customer protection, digital payment safety, and deepen financial markets
• Overall, the RBI continues to prioritise growth support while remaining vigilant on inflation, with future policy actions to be guided by evolving data and the new GDP and CPI series.