**Executive Summary**
This document is the February 2026 issue of the Reserve Bank of India (RBI) monthly Bulletin, released on February 20, 2026. It includes the bi-monthly monetary policy statement (February 6, 2026), a speech, three articles, and current statistics. The articles cover the state of the economy, an assessment of the Union Budget 2026-27, and retail inflation volatility in India.
**Key Points / Main Content**
* **RBI Bulletin - February 2026 Contents:**
* Bi-monthly monetary policy statement (February 6, 2026)
* One speech
* Three articles
* Current statistics
* **State of the Economy:**
* Global economic activity remained steady despite geopolitical uncertainty.
* The domestic economy shows resilience with aggregate sales growth.
* Industrial activity remains strong, and the services sector sustains healthy growth.
* The Union Budget 2026-27 reaffirms commitment to fiscal consolidation and long-term growth.
* Headline inflation remains benign under the revised CPI series.
* Foreign portfolio investments and the Indian rupee rebounded due to India-EU free trade agreement and the interim India-US trade deal.
* **Union Budget 2026-27: An Assessment:**
* Budget 2026-27 prioritises infrastructure investment, technological self-reliance, and human capital development amidst global economic uncertainty.
* Reaffirms commitment to fiscal discipline.
* Highlights:
* Gross fiscal deficit is budgeted to decline to 4.3% of GDP in 2026-27.
* 12.2 lakh crore is earmarked for capital expenditure.
* Effective capital expenditure is budgeted to increase to 4.4% of GDP.
* Revenue expenditure is budgeted at 10.5% of GDP.
* Gross tax revenue is budgeted to increase by 8.0%.
* **Retail Inflation Volatility in India: Sources, Determinants, and Implications:**
* Article examines sources of headline inflation volatility in India.
* Highlights:
* The primary source of headline inflation volatility is vegetable prices (TOP: tomato, onion, and potato).
* Volatility has eased under the flexible inflation targeting (FIT) framework.
* Inflation volatility has declined since 2021–22.
* Timely supply-side interventions played a role in dampening the adverse effects of commodity-specific price spikes.
* A well-coordinated policy mix is essential for maintaining price stability.
**Impact Analysis**
**Stakeholder: Government**
* **Impact:** The Union Budget 2026-27 assessment and the analysis of retail inflation volatility provide insights for policy formulation and fiscal management.
* **Action Required:** The Government needs to continue its commitment to fiscal consolidation, infrastructure investment, and targeted supply-side interventions to manage inflation and promote economic growth.
**Stakeholder: Reserve Bank of India (RBI)**
* **Impact:** The RBI's monetary policy decisions are informed by the economic analysis presented in the Bulletin, particularly the state of the economy and retail inflation trends.
* **Action Required:** The RBI needs to consider the analysis of inflation volatility and the impact of government interventions when formulating monetary policy.
**Stakeholder: Investors (Foreign and Domestic)**
* **Impact:** The Bulletin provides an overview of the Indian economy's performance and future outlook, which influences investment decisions.
* **Action Required:** Investors need to evaluate the information regarding economic stability, budget allocations, and inflation trends to make informed investment decisions.
**Stakeholder: General Public**
* **Impact:** The public is indirectly affected by the economic conditions discussed in the Bulletin, including inflation and fiscal policies.
* **Action Required:** No direct action is required, but the public may benefit from understanding the economic context to make informed financial decisions.
Key Entities Referenced
Reserve Bank of India: Central bank of India, the issuer of the press release.
RBI Bulletin: Monthly publication of the Reserve Bank of India containing articles and statistics.
Union Budget 2026-27: The annual financial statement of the government of India for the fiscal year 2026-2027, which is assessed in the bulletin.
Retail Inflation Volatility in India: Sources, Determinants and Implications: Article examining the causes and implications of retail inflation fluctuations.
State of the Economy: Article assessing the economic activity of India.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय �रज़व र् बकैं
RESERVE BANK OF INDIA
वेबसाइट : www.rbi.org.in/hindi संचार �वभाग, केंद्र�य कायार्लय, शह�द भगत �सहं माग,र् फोटर्, मुंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मले /email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
February 20, 2026
RBI Bulletin – February 2026
Today, the Reserve Bank released the February 2026 issue of its monthly Bulletin.
The Bulletin includes bi-monthly monetary policy statement (February 6, 2026), one
speech, three articles and current statistics.
The three articles are: I. State of the Economy; II. Union Budget 2026-27: An
Assessment; and III. Retail Inflation Volatility in India: Sources, Determinants, and
Implications.
I. State of the Economy
Global economic activity held up despite a pick-up in geopolitical uncertainty.
Domestic economy remained resilient with quarterly results of listed private companies
showing strengthening of aggregate sales growth. Industrial activity remained strong,
and services sector sustained its healthy growth. The Union Budget 2026-27
reaffirmed Government’s commitment to fiscal consolidation without diluting the focus
on long-term growth with stepped up allocation towards capital expenditure. The
headline inflation continues to remain benign as per the first print under the revised
CPI series. Foreign portfolio investments and Indian rupee staged a comeback with
investor sentiments turning around following the India-EU free trade agreement and
the interim India-US trade deal.
II. Union Budget 2026-27: An Assessment
By Akash Raj, Harshita Yadav, Ettem Abhignu Yadav, Aayushi Khandelwal, Anoop K
Suresh, and Shromona Ganguly
This article presents an assessment of the Union Budget 2026-27. At a time of global
economic uncertainty, the Budget prioritises infrastructure investment, technological
self-reliance, and human capital development. It reaffirms the Government’s
commitment to fiscal discipline while strengthening resilience, innovation and long-
term economic growth.
1Highlights:
• In 2026-27, the gross fiscal deficit is budgeted to decline to 4.3 per cent of GDP
from 4.4 per cent of GDP in 2025-26 (Revised Estimates, RE), keeping in view
the Government’s medium-term aim to reach a debt to GDP ratio of 50±1 per
cent by fiscal year 2030-31.
• Continuing the impetus observed in the previous fiscal years, the Union Budget
2026-27 earmarks ₹12.2 lakh crore (3.1 per cent of GDP) for capital
expenditure. The effective capital expenditure is budgeted to increase to 4.4
per cent of GDP in 2026-27 from 3.9 per cent of GDP in 2025-26 (RE). Revenue
expenditure is budgeted to be contained at 10.5 per cent of GDP in comparison
to 10.8 per cent of GDP in 2025-26 (RE).
• On the receipts side, gross tax revenue is budgeted to increase by 8.0 per cent
in 2026-27 over 2025-26 (RE), largely due to the projected accelerated growth
in income tax and union excise duties.
III. Retail Inflation Volatility in India: Sources, Determinants and Implications
By Renjith Mohan, Saquib Hasan, Suvendu Sarkar and Joice John
This article, based on the Consumer Price Index-Combined (base 2012=100),
examines the sources of headline inflation volatility in India, analyses the volatility
spillovers, and assesses the effectiveness of policy interventions.
Highlights:
• The primary source of headline inflation volatility is vegetable prices—
specifically tomato, onion, and potato (TOP), along with volatility spillovers
emanating from non-TOP vegetables.
• Volatility has eased under the flexible inflation targeting (FIT) framework relative
to the pre-FIT period, even amid repeated supply shocks.
• The decline in inflation volatility since 2021–22 suggests that price shocks no
longer broadly propagate across the inflation basket, indicating anchoring of
inflation expectations.
• Since 2021, the Government’s timely and targeted supply-side interventions
played a crucial role in dampening the adverse effects of commodity-specific
price spikes on headline inflation and its volatility.
• A well-coordinated policy mix, combining monetary policy actions anchoring
inflation expectations, along with fiscal interventions mitigating the ill-effects of
sporadic supply shocks, is essential for maintaining price stability in an
emerging market economy like India.
The views expressed in the Bulletin articles are of the authors and do not represent
the views of the Reserve Bank of India.
(Brij Raj)
Press Release: 2025-2026/2146 Chief General Manager
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