Amid rising global trade uncertainties and tariff challenges, the Reserve Bank of India (RBI) has revised India’s real GDP growth forecast for FY2025-26 to 6.5%, down from its earlier estimate of 6.7%, RBI Governor Sanjay Malhotra announced during the central bank’s policy briefing on Wednesday.
This comes after India posted a robust 9.2% growth in the previous fiscal year (2024–25), as per data released by the Ministry of Statistics and Programme Implementation (MOSPI).
“The real GDP, as you are all aware, is expected to grow at 6.5% this year, following last year’s strong 9.2% performance,” said Malhotra.
Despite the downward revision, the RBI remains optimistic about the domestic economic outlook. The agriculture sector is anticipated to perform well due to healthy reservoir levels and favorable crop production, while manufacturing activity is picking up momentum, supported by positive business sentiment. The services sector continues to be a steady contributor to the overall growth.
Malhotra noted that growth has improved after a sluggish first half in the previous financial year, but acknowledged that it still falls short of the levels India aims to achieve.
On the demand side, rural consumption is expected to remain strong, driven by the positive agricultural outlook, while urban consumption is gradually increasing due to rising discretionary spending.
“Investment activity has gained traction,” Malhotra said, adding that it is likely to improve further due to factors such as high-capacity utilization, government infrastructure spending, and the healthy balance sheets of banks and corporates, coupled with easing financial conditions.
However, he flagged concerns over external trade. Merchandise exports may come under pressure due to global headwinds and rising protectionism, though services exports are projected to remain resilient, offering support to the overall growth trajectory.
The revised projection reflects a cautious yet confident approach by the RBI, balancing global risks with signs of strengthening domestic fundamentals.
