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Informist, Friday, Dec. 5, 2025

 

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--RBI revises FY26 GDP growth forecast to 7.3% from 6.8% 
--RBI revises Oct-Dec GDP growth forecast to 7.0% from 6.4?rlier 
--RBI revises Jan-Mar GDP growth forecast to 6.5% from 6.2?rlier 
--RBI revises Apr-Jun FY27 GDP growth estimate to 6.7% from 6.4?rlier 
--RBI projects Jul-Sept FY27 GDP growth at 6.8% 
--Risks to growth forecasts are evenly balanced
--Growth has been relatively strong
--Growth to soften somewhat
--Low headline, core CPI gave MPC room to provide growth support
--Look back at year so far with satisfaction
--In last month of eventful, challenging 2025
--Approach new year with vigour to support economy
--Aim to accelerate progress, support econ in 2026
--Growth-inflation balance continues to provide policy space
--Current growth inflation dynamics show rare Goldilocks period
--Econ activity H1 benefitted from rationalised income tax, GST
--Econ activity H1 benefitted from lower crude prices
--Some signs of weakness in few leading indicators of growth
--High frequency data suggest econ activity holding up in Q3
--Urban demand recovering steadily
--Investment activity remains healthy
--Farm growth supported by healthy kharif output, rabi sowing
--Mfg activity continues to improve, svcs sector steady
--Agri growth aided by healthy kharif, higher reservoir levels
--Congenial monetary policy condition to support econ activity
--Congenial economic, fincl conditions to support econ activity
--Domestic factors seen supporting econ activity
--Continued reforms should support econ
--Will continue to meet productive needs of econ proactively
--Will continue to meet econ needs with macro stability

 

NEW DELHI – The Reserve Bank of India Friday raised its GDP growth projection for 2025-26 (Apr-Mar) to 7.3% from 6.8%. It also scaled up its growth estimates for the last two quarters of the year, with growth in Oct-Dec now seen at 7.0% against 6.4% projected earlier, and that in Jan-Mar expected at 6.5%, against 6.2?rlier.

 

The central bank raised its GDP growth forecast for the first quarter of the next financial year to 6.7% from 6.4. The RBI gave a GDP growth projection of 6.8% for the September quarter of FY27. The upward revisions to growth projections come after India's GDP grew at a six-quarter high pace of 8.2% in Jul-Sept. After the strong GDP growth in the September quarter, the finance ministry, which had projected FY26 GDP growth between 6.3% and 6.8%, also expects the economy to grow over 7% in the current year. 

 

But GDP growth, while remaining resilient, is expected to soften somewhat, RBI Governor Malhotra said in his policy statement. As such, considering the benign inflation outlook, the Monetary Policy Committee unanimously voted to cut the policy repo rate by 25 basis points to 5.25% to support growth. It decided to maintain its neutral stance.

 

External uncertainties pose downside risks to the growth outlook, Malhotra said, adding that the speedy conclusion of various ongoing trade and investment negotiations present upside potential. Among trade deals, a speedy conclusion of a trade deal with the US alone can significantly address India's external sector risks as it may bring down the tariff on Indian goods from the current 50%.

 

But even as merchandise exports face some headwinds, services exports are likely to remain strong, Malhotra said. India's services exports, at $35.17 billion in October, crossed the merchandise exports print of $34.38 billion for the month, down 11.8%.

 

The economy is strong-footed on the domestic front. "Rural demand continues to be robust while urban demand is recovering steadily. Investment activity remains healthy with private investment gaining steam on the back of expansion in non-food bank credit, and high capacity utilisation," Malhotra said. "On the supply side, agricultural growth is supported by healthy kharif crop production, higher reservoir levels and better rabi crop sowing. Manufacturing activity continues to improve, while the services sector is maintaining a steady pace."

 

High-frequency indicators suggest that domestic economic activity is holding up in Oct-Dec, although there are some emerging signs of weakness in a few leading indicators, Malhotra said. Overall, the risks to India's growth outlook are evenly balanced, the governor said.

 

As the economy enters the last eventful and challenging month of 2025, the year so far appears satisfactory, Malhotra said. Economic activity in the first half of the year benefited from low crude oil prices and the Goods and Services Tax reforms, he added.

 

The current dynamic of strong growth and benign inflation presents a rare Goldilocks period, the governor said, adding that it provides the RBI policy space to support growth. The central bank aims to support the economy in the next calendar year with new vigour, Malhotra said.

 

"Looking ahead, domestic factors such as healthy agricultural prospects, continued impact of GST rationalisation, benign inflation, healthy balance sheets of corporates and financial institutions and congenial monetary and financial conditions should continue to support economic activity," Malhotra said. "We will continue to meet the productive requirements of the economy in a proactive manner while ensuring macroeconomic stability."  End

 

US$1 = INR 89.87

 

Reported by Krity Ambey

Edited by Avishek Dutta

 

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