Dose of caution in the optimism

The MPC's rate-cut pause is prudent as it waits for clarity on the impact of a host of factors - US tariffs to GST cuts - on the economy

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The Reserve Bank of India (RBI) now believes that the Indian economy will grow at 6.8% in 2025-26.

This is higher than RBI's 6.5% projection made in August. It has also made a downward revision to its inflation forecast for the current fiscal year from 3.1% in August to 2.6% now. This is the lowest-ever inflation, although within the 2%-6% target band of RBI, since the current series started in 2012-13. And a 6.8% growth rate is above India's potential growth rate.