Economic activity continues to expand, but the pace of growth has eased in recent months, particularly in high-frequency indicators.
Manufacturing activity slowed in March, with the PMI falling to 53.8, its lowest level since September 2021. Services activity also moderated, with the PMI at 57.2, bringing the composite index down to 56.5. Businesses cited geopolitical tensions, volatile markets and rising costs as factors weighing on output.
At the same time, changes to the GDP base year are expected to lift headline growth estimates for FY26 to around 7.6%, compared with earlier projections, according to Bloomberg data, largely reflecting updated methodology rather than a shift in underlying momentum.
Madan Sabnavis of Bank of Baroda said the central bank is likely to stay on hold. “We do not expect any change in repo rate or stance this time. The tone will be cautious and what will be eagerly awaited is RBI’s forecast of GDP and inflation under the prevailing uncertainty,” he said.
