The Reserve Bank of India (RBI) has retained its real GDP growth projection for 2025-26 at 6.5%, citing resilient domestic demand conditions and continued policy support, even as the global environment remains uncertain.
“Taking all these factors into account, projection for real GDP growth for 2025-26 has been retained at 6.5 per cent, with Q1 at 6.5 per cent, Q2 at 6.7 per cent, Q3 at 6.6 per cent, and Q4 at 6.3 per cent. Real GDP growth for Q1:2026-27 is projected at 6.6 per cent. The risks are evenly balanced,” RBI governor Sanjay Malhotra said in the monetary policy statement.
The central bank expects India’s growth momentum to be sustained by robust private consumption, especially rural demand, and strong government capital expenditure. Aiding this outlook are a normal southwest monsoon, healthy reservoir levels, and a buoyant services sector, including construction and trade.
Private consumption, aided by rural demand, and fixed investment, supported by buoyant government capex, continue to boost economic activity, the monetary policy statement said. It also noted that agricultural activity has been supported by steady monsoon progress, while services and construction remain robust.
Industrial concerns
However, the RBI flagged concerns around the industrial sector, which it said remained “subdued and uneven across segments, pulled down by electricity and mining.”
On the external front, risks persist. “Prospects of external demand, however, remain uncertain amidst ongoing tariff announcements and trade negotiations. The headwinds emanating from prolonged geopolitical tensions, persisting global uncertainties, and volatility in global financial markets pose risks to the growth outlook,” the RBI said.
Despite these challenges, the RBI sees several tailwinds for domestic growth: “Above normal southwest monsoon, lower inflation, rising capacity utilisation and congenial financial conditions continue to support domestic economic activity.”
It said the supportive monetary, regulatory and fiscal policies including robust government capital expenditure should also boost demand. The services sector is expected to remain buoyant, with sustained growth in construction and trade in the coming months.
