Compared with its June policy, the RBI today kept the repo rate unchanged at 5.25% and retained its neutral stance, but marginally improved the FY27 macroeconomic outlook. Real GDP growth is now projected at 6.7%, against 6.6% previously, while inflation is estimated at 5.0%, slightly lower than the earlier 5.1% forecast.

The revisions suggest confidence that domestic demand and financial conditions can absorb external pressures without requiring an immediate policy response.

India’s economy remains resilient despite geopolitical tensions, volatile energy prices, supply-chain disruptions and El Niño-related uncertainty. Strong private consumption, continuing investment momentum and robust services activity support the growth outlook, although higher input and logistics costs may weigh on selected sectors. Healthy banking-system liquidity and sustained credit demand should aid transmission, while potential FCNR (B) inflows could strengthen foreign-currency funding and ease pressure on market liquidity.

The unchanged rate also gives borrowers and businesses greater near-term certainty. However, the RBI is likely to remain vigilant as crude prices, currency movements; food inflation and global monetary tightening could alter the balance of risks.

Overall, the outcome is more optimistic than the previous policy outlook but still cautious: growth expectations have strengthened, inflation concerns have eased modestly, and the central bank has preserved flexibility to respond if conditions change. We, at Namdev Finvest Limited, still maintain a conservative stance amid the hazy outlook due to the dual risks of the West Asia conflict and the effects of El Niño on the Indian economy at large.

For the MSME sector, the past two years have been characterised by regulatory tightening and higher risk-weight requirements, which have strengthened underwriting standards and improved credit discipline across the industry. Asset quality has improved, leverage levels have moderated and credit demand remains healthy. We believe the sector has largely worked through the peak of the stress cycle and is entering a more sustainable growth phase, with better credit quality, lower over-leverage and stronger borrower resilience.

MSME credit outstanding grew 16% year-on-year to Rs 67.6 lakh crore, while GNPAs improved by around a percent over the past year. In this environment, NBFCs with deep rural and semi-urban presence and strong risk assessment capabilities will be best positioned to support underserved MSMEs and microfinance borrowers while maintaining prudent growth. We expect these markets to remain key drivers of credit demand, supported by improving asset quality, funding availability and stronger borrower fundamentals.

The stable policy environment also provides greater visibility on funding costs and interest rate expectations, enabling NBFCs to undertake more effective balance sheet planning and prudent liquidity management. Going forward, while global uncertainties will continue to be monitored closely, the current policy stance provides the confidence and stability needed to support responsible credit expansion and sustain India’s long-term growth momentum.

Indranil Pan, Chief Economist, YES BANK on the Monetary Policy

“A no surprise policy but with some crucial messages. At the press conference, it was brought to clarity that headline inflation is the one that the RBI targets, while core inflation is more for the understanding of the forces behind the inflation. While small changes have come through for the growth and inflation forecasts, one should not read too deeply into these as these appear to be mere adjustments and reflect the actual data flows of Q1FY27.

I think that there is no clear forward guidance and rightly so as there appears to be many moving parts critically related to the geopolitics of the West Asia. With oil, currency and other commodity prices remaining volatile from a global angle and with El Nino risks persisting domestically, the risk to inflation persists.

Having said that, in the immediate horizon the inflation risks are yet to play out, including a muted pass-through of the cost pressures. While adopting a wait-and-watch for now, RBI will track incoming data and watch out for second order inflation before taking a call on rates. While all policies starting from October remain live, we think the RBI will be willing to hold back on its rate increase for the maximum period as any pre-emptive hike can dent growth.”

Essar’s Group Chief Financial Officer on the RBI Monetary Policy-

D. Muthukumaran, Group Chief Financial Officer, Essar

“The RBI’s upward revision of the GDP growth outlook, despite global uncertainties, is a positive affirmation of India’s economic resilience. Equally welcome is the decision to hold the repo rate steady through an active investment cycle, even with inflationary pressures at play, as it provides businesses with much-needed policy stability. For infrastructure and other long-gestation sectors, a stable cost of capital is as important as sustained public investment in supporting long-term growth.”