Is India's real GDP growth set to reach 6.5% in FY 2025-26 as projected by RBI?

New Delhi, May 29 (NationPress) The Reserve Bank of India (RBI) has projected that India's real GDP growth for the fiscal year 2025-26 will be 6.5 percent, indicating a balanced risk outlook.

The RBI's ‘2024-2025 annual report’ highlights that the Indian economy is set to maintain its position as the fastest-growing major economy in FY26, thanks to its strong macroeconomic foundations, a resilient financial sector, and a commitment to sustainable growth.

This anticipated growth comes in the face of global financial market instability, geopolitical conflicts, trade disruptions, supply chain issues, and uncertainties caused by climate change, all of which could negatively impact growth and positively influence inflation.

The Indian economic outlook for 2025-26 appears bright, bolstered by a recovery in consumer demand, ongoing government investment in capital expenditure, adherence to fiscal discipline, healthy corporate and banking balance sheets, easing financial conditions, sustained strength in the services sector, and growing confidence among consumers and businesses, alongside solid macroeconomic fundamentals.

“The agriculture sector's prospects look promising for 2025-26, aided by an anticipated above-normal south-west monsoon and several government initiatives aimed at improving productivity. The Union Budget 2025-26 has introduced numerous initiatives to bolster this sector,” the RBI report states.

The manufacturing sector is expected to gain momentum in 2025-26, driven by increased domestic demand, higher capacity utilization, and optimistic sentiments among consumers and businesses.

The government's commitment to expanding the manufacturing base, coupled with policy support from the ongoing Production-Linked Incentive (PLI) scheme and the National Manufacturing Mission outlined in the Union Budget 2025-26, is anticipated to further fortify the ‘Make in India’ initiative, according to the RBI's annual report.

Optimism regarding the manufacturing and services sectors is also echoed in forward-looking surveys conducted by the Reserve Bank.

In FY 2024-2025, the Indian economy demonstrated resilience, backed by robust macroeconomic fundamentals and proactive policy initiatives, even amidst ongoing geopolitical tensions and economic fragmentation.

“Despite numerous global challenges, Indian financial markets exhibited resilience and orderly movements. The central government continued its fiscal consolidation efforts, supported by strong tax revenue and prudent expenditure management. On the external front, the merchandise trade deficit was offset by strong services exports and steady remittance inflows, maintaining the Current Account Deficit (CAD) at manageable levels,” the RBI report concludes.