RBI Projects 6.5% GDP Growth for FY26 Amid Broad-Based Economic Resilience
The Reserve Bank of India (RBI) has projected India’s GDP growth at 6.5% for the fiscal year 2025–26, underpinned by strong agricultural performance, a gradual uptick in industrial activity, and sustained momentum in the services sector.
Releasing the projections on Friday, RBI Governor Sanjay Malhotra highlighted that quarterly growth is expected to remain stable, with estimates at 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4.
“Domestic economic activity has shown resilience so far in FY26. The agriculture sector, supported by strong kharif and rabi harvests and healthy reservoir levels, remains a pillar of strength,” Malhotra said. The wheat procurement, at its highest in four years, has further improved the stock position, providing stability in food grain supplies.
On the industrial front, growth remains uneven but improving, while the services sector continues to expand strongly, with the PMI Services Index clocking 58.8 in May 2025, indicating robust business activity.
Malhotra noted that private consumption, especially discretionary spending, remains solid, with urban demand improving and rural demand steady. Investment sentiment has also turned positive, backed by encouraging high-frequency indicators.
In external trade, merchandise exports rebounded sharply in April 2025, while non-oil, non-gold imports recorded double-digit growth—signaling strong domestic demand. Services exports also continue to perform well. Looking ahead, the anticipated above-normal southwest monsoon is expected to further boost agriculture and rural demand. Meanwhile, sustained expansion in services should drive urban consumption.
The RBI Governor also underscored the positive role of the government’s continued capital expenditure push, rising capacity utilisation, and easing financial conditions in bolstering investment.However, Malhotra cautioned against persistent geopolitical tensions, climate-related uncertainties, and trade policy volatility, which pose downside risks to the economic outlook. On a positive note, he said progress on free trade agreements, particularly with the United Kingdom, could support growth in goods and services trade in the coming quarters.
