The Reserve Bank of India (RBI) reduced its growth forecast for FY26 to 6.6 per cent from 6.9 per cent and for FY27 to 6.3 per cent from 6.7 per cent in its policy announcement on Friday. Mishra said the RBI’s forecast is too conservative, arguing that the underlying economy is performing significantly better than official projections suggest.
Speaking to ANI, the World Bank executive director said internal assessments indicated that the economy grew at nearly 8 per cent during the February-March period.
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“I think RBI’s forecasts are too conservative,” Mishra said. “I think the economy is doing far better than what they’re building in. But that’s the difference, I guess, when they have to be the official forecaster–they may be slightly more conservative.”
Mishra also explained the central bank’s decision to maintain a status quo on interest rates and its policy stance, citing the absence of persistent inflationary pressures. He said temporary upward revisions to inflation driven by high oil prices do not warrant a rate hike unless crude oil sustainably breaches the USD 130-per-barrel mark next year.
Mishra described the use of rate hikes to manage panic in the currency market as an inefficient and costly measure that often fails to produce the desired results.Also read | RBI says it is fully prepared for Anthropic’s frontier AI model Mythos
“So without any evidence of sticky inflation, I think it was unwise to raise rates,” Mishra said. “Some people in the markets wanted a rate hike to protect the currency from further depreciation. But my advice has consistently been that rate hikes to prevent panic in the currency market are like option 15, not option 1, because they are too costly from a growth perspective. And frankly, they often don’t work. So I’m very glad that the RBI has kept rates unchanged.”
Mishra noted that it remains premature to anticipate major fiscal adjustments or accurately project nominal GDP growth, as much will depend on GST and corporate tax collections. He added that only two months have passed in the current financial year.