The Reserve Bank of India (RBI) Governor Sanjay Malhotra admitted that a projected weak south-west monsoon could impact rural demand and private consumption.

During the post-monetary policy conference on Friday, Malhotra said rural demand and private consumption have remained healthy so far but some moderation now could be inevitable. 

"Rural demand, yes; private consumption, yes. Some impact will be there," the governor said while replying to a question on the issue.

A deficient south-west monsoon may have implications for agricultural production and demand in rural areas.

"Additionally, the projected deficiency in the south-west monsoon will have implications for agricultural production and rural demand. However, programmes and initiatives for crop diversification, water harvesting and conservation, climate-resilient practices and short-duration crops, among others, are expected to mitigate the impact," he said.

The governor also pointed to broader risks from rising input costs and supply disruptions, which could weigh on economic activity and consumption. The overall impact would depend on the duration of the conflict in West Asia and the pace of supply-chain normalisation.

The rise in prices of energy and other inputs would also weigh on economic activity going ahead. While import diversification in affected commodities is likely to improve supply, it would come at a higher cost.

Meanwhile, the RBI lowered the GDP growth forecast by 0.30% for FY27 to 6.6% from 6.9% earlier.

The RBI projected GDP growth for Q1FY27 at 6.6%, Q2FY27 at 6.3%, Q3FY27 at 6.5% and Q4FY27 at 6.8%.

"Prolonged global supply chain disruptions, volatility in global financial markets and weather-related shocks continue to pose downside risks to the domestic growth outlook," Malhotra said.