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Informist, Wednesday, Aug. 6, 2025

MUMBAI - Following are the excerpts on growth from the statement issued by the Reserve Bank of India on Wednesday at the conclusion of the Monetary Policy Committee's third bi-monthly meeting for 2025-26 (Apr-Mar):

Domestic growth is holding up and is broadly evolving along the lines of our assessment even though some high-frequency indicators showed mixed signals in May-June. Rural consumption remains resilient while urban consumption revival, especially discretionary spending, is tepid. Fixed investment supported by buoyant government capital expenditure continues to support economic activity.

On the supply side, steady southwest monsoon is supporting kharif sowing, replenishing reservoir levels and boosting agriculture activity. Moreover, services activity remains steady, though some high-frequency indicators recorded a modest expansion. Services Purchasing Managers' Index increased to an 11-month high of 60.5 in July 2025. Construction activity continues to exhibit resilience. However, growth in the industrial sector remained subdued and uneven across segments, pulled down by electricity and mining. While the manufacturing Purchasing Managers' Index remained elevated in Apr-Jun, the Index of Industrial Production showed moderation.

Turning to the growth outlook, the above normal southwest monsoon, lower inflation, rising capacity utilisation, and congenial financial conditions continue to support domestic economic activity. The supportive monetary, regulatory and fiscal policies including robust government capital expenditure, should also boost demand. With sustained growth in construction and trade segments, the services sector is expected to remain buoyant in the coming months. 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.

Taking all these factors into account, real GDP growth for 2025-26 is projected at 6.5%, with quarterly growth estimated at 6.5% in Apr-Jun, 6.7% in Jul-Sept, 6.6% in Oct-Dec, and 6.3% in Jan-Mar. The real GDP growth for Apr-Jun of FY27 is projected at 6.6%. The risks are evenly balanced.  End

Compiled by Srijita Bose

Filed by Vandana Hingorani

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