RBI Holds Steady on GDP Growth at 6.5% for FY26 Despite Global Trade Uncertainties
The Reserve Bank of India (RBI) has maintained its GDP growth projection for the financial year 2025-26 at 6.5 percent, signaling confidence in the country’s economic resilience amid a challenging global trade landscape. RBI Governor Sanjay Malhotra announced the decision during the monetary policy update on Wednesday. He emphasized that domestic activity remains robust, supported by favourable macroeconomic conditions, including an above-normal southwest monsoon, lower inflation, and improving capacity utilization. “Prospects of external demand, however, remain uncertain amidst ongoing tariff announcements and trade negotiations. Taking all these factors into account, real GDP growth for 2025-26, the current year, is projected at 6.5 per cent, our earlier projection,” the Governor said. The central bank remains optimistic about India’s growth potential while cautioning about persistent global risks.
RBI Maintains GDP Growth Amid Trade Challenges
The RBI carefully reviewed economic indicators before deciding to keep its GDP forecast unchanged at 6.5 percent for FY26. Governor Malhotra highlighted key domestic drivers, including favourable monsoon rains and stable inflation, which contribute to economic stability. “The domestic economy is supported by an above-normal southwest monsoon, lower inflation, rising capacity utilization, and congenial financial conditions,” the Governor said. Despite global uncertainties—such as trade negotiations and tariff policies—the RBI believes India’s internal demand and growth momentum remain strong. This steady growth outlook underscores the country’s ability to navigate external headwinds while sustaining economic momentum.
Services Sector And Government Spending Bolster Growth
Governor Malhotra pointed out that the services sector continues to play a vital role in driving growth, especially the construction and trade segments. “With sustained growth in construction and trade segments, the services sector is expected to remain buoyant in the coming months,” he said. Additionally, robust government capital expenditure and supportive fiscal policies are further strengthening demand across the economy. The RBI’s regulatory and monetary stance aims to maintain a conducive environment for businesses and consumers alike, providing confidence for sustained economic activity even as external risks linger.
Risks And Quarterly Growth Outlook
The RBI acknowledged several downside risks that could impact growth, including prolonged geopolitical tensions and ongoing volatility in global financial markets. “Global uncertainties and volatility in global financial markets pose risks to the growth outlook,” the Governor reiterated. Nevertheless, the RBI’s quarterly projections remain optimistic: Q1 FY26 is forecast at 6.5 percent, Q2 at 6.7 percent, Q3 at 6.6 percent, and Q4 at 6.3 percent. For Q1 FY27, growth is projected at 6.6 percent. The central bank described the risks to growth as evenly balanced, signaling a cautious but confident approach to navigating future challenges.
Key RBI GDP Growth Projections At A Glance
- FY26 GDP Growth: 6.5% (unchanged)
- Q1 FY26: 6.5%
- Q2 FY26: 6.7%
- Q3 FY26: 6.6%
- Q4 FY26: 6.3%
- Q1 FY27: 6.6%
- Risks: Global uncertainties, geopolitical tensions, market volatility.
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