GG News Bureau
Mumbai, 1st Oct: The Reserve Bank of India (RBI) has revised its projection of India’s GDP growth rate for 2025-26 to 6.8%, up from the earlier estimate of 6.5%, citing the impact of growth-inducing structural reforms such as the rationalisation of GST.
RBI Governor Sanjay Malhotra, in his statement on Wednesday, said that the upward revision reflects India’s strong economic fundamentals despite global headwinds.
India’s GDP recorded 7.8% growth in Q1:2025-26, driven by robust private consumption and fixed investment. On the supply side, gross value added (GVA) grew 7.6%, led by a revival in manufacturing and steady expansion in services.
“Taking all these factors into account, real GDP growth for 2025-26 is now projected at 6.8%, with Q2 at 7.0%, Q3 at 6.4%, and Q4 at 6.2%,” Malhotra said.
Rural and Urban Demand Rising
The Governor highlighted that rural demand remains strong, supported by a good monsoon and robust agricultural activity, while urban demand is gradually reviving.
High-frequency indicators, such as cement production and steel consumption, show resilience in investment activity despite some moderation in capital goods imports. Services activity continues to sustain momentum, while manufacturing recovery is firming up.
Global and Domestic Outlook
Malhotra noted that the global economy has been more resilient than expected in 2025, led by robust growth in the US and China. However, elevated policy uncertainty, persistent inflation in advanced economies, and volatile financial markets continue to pose risks.
Back home, an above-normal monsoon, buoyant services, and steady employment conditions are expected to boost demand further. Rising capacity utilisation and improving domestic demand are projected to support fixed investment.
At the same time, the RBI cautioned that ongoing tariff disputes, trade policy uncertainties, geopolitical tensions, and volatility in global financial markets could weigh on India’s external demand and overall growth outlook.
