RBI Forecasts 6.5% GDP Growth for India in 2025-26
Economic Outlook for India
Mumbai, June 6: The Reserve Bank of India (RBI) has estimated that India's GDP will grow by 6.5% in the fiscal year 2025-26, attributing this growth to robust domestic economic activities, particularly in agriculture, industry, and services.
The projected quarterly growth rates for the upcoming financial year are as follows: Q1 at 6.5%, Q2 at 6.7%, Q3 at 6.6%, and Q4 at 6.3%.
According to provisional estimates from the National Statistical Office (NSO), India's real GDP growth for 2024-25 is also set at 6.5%. RBI Governor Sanjay Malhotra noted that domestic economic activities have shown resilience, with a strong agriculture sector supported by good harvests in both kharif and rabi seasons, ensuring a comfortable supply of major food crops. Healthy reservoir levels and the highest wheat procurement in four years contribute to a positive stock position.
Industrial activity is on the rise, although the recovery pace varies. The services sector is expected to sustain its momentum, with the PMI services index reflecting robust growth at 58.8 in May 2025.
On the demand front, private consumption, a key driver of aggregate demand, remains strong, with a gradual increase in discretionary spending. Rural demand is stable, while urban demand is showing signs of improvement. Investment activities are also picking up, as indicated by high-frequency indicators.
Merchandise exports saw significant growth in April 2025 after a period of underperformance. Non-oil, non-gold imports experienced double-digit growth, indicating strong domestic demand. Services exports continue to grow robustly.
Looking ahead, the agriculture sector and rural demand are expected to benefit from anticipated above-normal southwest monsoon rainfall. Additionally, sustained growth in services is likely to boost urban consumption.
The government's ongoing focus on capital expenditure, high capacity utilization, improving business sentiment, and favorable financial conditions are expected to further stimulate investment activities.
However, uncertainties in trade policy may impact merchandise export prospects. The completion of a free trade agreement (FTA) with the United Kingdom and advancements with other nations could enhance trade in goods and services, according to the RBI Governor.
Malhotra also highlighted that ongoing geopolitical tensions, global trade issues, and weather-related uncertainties present potential risks to growth.
--News Media