The Indian economy is poised to remain the fastest-growing major economy in 2025-26 by leveraging its sound macroeconomic fundamentals, robust financial sector and commitment towards sustainable growth, said the Reserve Bank of India in its annual report.
This comes when the global financial market volatility, geopolitical tensions, trade fragmentation, supply chain disruptions and climate-induced uncertainties pose downside risks to the growth outlook and upside risks to the inflation outlook.
India remained the fastest-growing large economy despite the country’s real Gross Domestic Product (GDP) growth moderating to 6.5 per cent in 2024-25. The government is set to release the GDP data for fourth quarter and Financial Year (FY25) tomorrow.
As per the central bank, India’s economic activity was bolstered by an improvement in consumption demand and net exports on the expenditure side and a buoyant services sector and recovery in agricultural production on the supply side.
RBI in its report said, “The outlook for the Indian economy remains promising in 2025-26, supported by revival in consumption demand, government’s continued thrust on capex while adhering to the path of fiscal consolidation.”
The report also highlighted other contributors to the positive outlook, including the resilience of the services sector, growing consumer and business optimism, and overall sound macroeconomic fundamentals.
The central bank noted that the National Manufacturing Mission, announced in the Union Budget 2025-26, is expected to further strengthen the ‘Make in India’ initiative, boosting the manufacturing sector and creating employment opportunities.
RBI also mentioned that India’s engagement in global trade has also been growing.
“India’s participation in 14 free trade agreements (FTAs) and six preferential trade agreements (PTAs), along with the new trade deals under negotiation with the US, Oman, Peru and the European Union (EU) may support growth in trade.”
