RBI Adjusts GDP Growth Forecast to 6.5% for 2025-26 Amid Global Uncertainties

Mumbai, April 9 (NationPress) The Reserve Bank of India’s monetary policy committee has revised its forecast for India’s GDP growth for the fiscal year 2025-26, lowering it by 20 basis points to 6.5 percent from 6.7 percent due to uncertainties stemming from global trade and policy shifts, particularly following the US tariff increases, stated RBI Governor Sanjay Malhotra on Wednesday.

The RBI Governor explained, “Primarily, uncertainty itself suppresses growth by influencing the investment and spending behaviors of both businesses and households. Additionally, the decline in global growth due to trade tensions will hinder domestic expansion. Furthermore, increased tariffs will adversely affect net exports.”

“Nevertheless, there are many known unknowns - such as the effects of relative tariffs, the elasticities concerning our export and import demands, and the policy actions implemented by the government, including the anticipated Foreign Trade Agreement with the US,” he added.

This situation complicates the precise assessment of the negative effects, he noted.

Considering all these elements, the projected real GDP growth for 2025-26 is now set at 6.5 percent, with expectations of 6.5 percent for Q1, 6.7 percent for Q2, 6.6 percent for Q3, and 6.3 percent for Q4, according to the RBI Governor.

He mentioned that while the risks are evenly distributed around these fundamental forecasts, high uncertainties persist due to the recent increase in global volatility.

India’s real GDP is projected to grow by 6.5 percent in 2024-25, following a remarkable 9.2 percent growth rate recorded in the preceding year. For 2025-26, the agriculture sector's outlook remains promising, supported by healthy reservoir levels and strong crop yields, Malhotra highlighted.

He noted that manufacturing activities are beginning to revive as business confidence remains strong, while the services sector continues to show resilience.

On the demand front, the positive outlook for the agriculture sector supports robust rural demand, while urban consumption is gradually increasing with a rise in discretionary spending.

Investment activities are gaining momentum and are expected to further improve due to sustained higher capacity utilization, the government’s ongoing focus on infrastructure spending, strong balance sheets of banks and corporations, along with easing financial conditions. While global uncertainties may dampen merchandise exports, services exports are anticipated to remain strong. Ongoing challenges from global trade disruptions continue to pose downside risks, Malhotra remarked.