Reserve Bank of India Governor Sanjay Malhotra on Friday cautioned that the projected shortfall in the south-west monsoon could hit rural demand and private consumption, although various government initiatives are expected to mitigate the impact.Speaking at the post-monetary policy press conference, Malhotra said consumption trends have remained healthy so far, but he acknowledged that a weak monsoon could hit demand in rural areas.“Rural demand, yes; private consumption, yes. There will be some impact,” the governor said while responding to a question on the possible impact of less rainfall.The RBI chief said the projected shortfall in monsoon rains could impact agricultural production and expenditure in rural areas.“Additionally, the projected shortfall in the south-west monsoon will have an impact on agricultural production and rural demand. However, programs and initiatives for crop diversification, water harvesting and conservation, climate-resilient practices and short-duration crops are expected to mitigate the impact,” he said.Energy prices, supply disruptions pose growth risksMalhotra also highlighted broader risks from rising energy costs and supply-chain disruptions, warning that prolonged pressures could weigh on economic activity.“Going forward, supply disruptions along with increases in prices of energy and other inputs are likely to weigh on economic activity,” he said.The governor said the extent of the impact will depend on how long the conflict-induced disruption continues and how quickly global supply chains return to normal.“However, the full impact will depend on the duration of the conflict, the time taken for supply chains to normalize and the approach to burden sharing among stakeholders,” Malhotra said.Diversification of imports into affected commodities may improve supply, but may also increase costs, the RBI said.RBI cuts growth forecast for FY 2027In the backdrop of uncertainty arising from the West Asia crisis and other downside risks, the central bank cut its GDP growth forecast for FY27 to 6.6% by 0.30 percentage points from the earlier estimate of 6.9%.RBI has projected GDP growth of 6.6% for Q1FY2027, 6.3% for Q2, 6.5% for Q3 and 6.8% for Q4.“Prolonged global supply chain disruptions, volatility in global financial markets and weather-related shocks pose downside risks to the domestic growth outlook,” the RBI governor said.
