RBI: India FY26 GDP growth projection at 6.5%

RBI: India FY26 GDP growth projection at 6.5%

The Reserve Bank of India (RBI) has revised its forecast for India's GDP growth in the fiscal year 2025-2026 (FY26) to 6.5%, down from its earlier projection of 6.7%. This adjustment reflects the impact of rising trade tensions and geopolitical uncertainties on the country's economic outlook [1].

Deloitte India, in its latest report, also projects a growth range of 6.4% to 6.7% for FY26, highlighting the positive domestic fundamentals and expanding global opportunities. However, the consultancy firm also notes the need to monitor trade exposures and geopolitical uncertainties, particularly the recent regional conflicts and restrictions on critical minerals and specialized fertilizers [2].

The International Monetary Fund (IMF) has projected India's growth at 6.4% for both 2025 and 2026, citing a more benign external environment. The IMF attributes India's stable growth to a reform momentum supporting robust consumption growth and a push for public investment [3].

Despite the downward revision, India's economic trajectory remains strong, driven by resilient capital markets, a dynamic consumer base, and a globally competitive workforce. The country's capital markets, in particular, have shown significant growth, with the market cap-to-GDP ratio climbing to 136% by December 2024 [2].

Strategic trade negotiations with key partners such as the UK, US, and EU are expected to boost income, jobs, and market access, acting as powerful multipliers for domestic demand. However, the recent regional conflict and restrictions on critical minerals and specialized fertilizers are likely to affect the growth outlook [1].

The Asian Development Bank (ADB) has trimmed its estimate for India's growth to 6.5% from 6.7%, citing similar concerns over US tariffs and softening trade momentum. The ADB, however, acknowledges India's relative strength in a volatile global landscape [2].

In conclusion, while the downward revision in India's GDP growth projection reflects the challenges posed by trade tensions and geopolitical uncertainties, the country's economic fundamentals remain robust. India's growth story will continue to be driven by a combination of strong domestic fundamentals and expanding global opportunities, despite the prevailing uncertainties.

References:
[1] https://economictimes.indiatimes.com/news/economy/indicators/deloitte-pegs-gdp-growth-at-6-46-7-in-fy26-on-strong-domestic-demand/articleshow/123114465.cms
[2] https://www.livemint.com/economy/deloitte-india-fy26-growth-forecast-gdp-economy-trade-strains-donald-trump-tariff-11754395635025.html
[3] https://news.abplive.com/business/indian-economy-india-gdp-imf-forecast-growth-outlook-1791501