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Informist, Friday, May 29, 2026

 

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--RBI: India econ expected to remain resilient in FY27 
--RBI: India econ seen resilient despite challenging external environment 
--RBI: Prolonged West Asia conflict poses downside risk to India econ 
--RBI: India growth prospects supported by strong macroecon fundamentals 
--RBI: Cos, bks healthy balance sheets bode well for India growth trajectory 
--RBI: Govt's thrust on capex bode well for India growth trajectory 
--RBI: Implementation of trade pacts to provide momentum to India's growth 
--RBI: Monetary policy actions during FY26 remained growth supportive 

 

NEW DELHI – The Indian economy is expected to remain resilient in the current financial year despite a challenging external environment, the Reserve Bank of India said Friday. India's growth prospects are supported by strong macroeconomic fundamentals, but a prolonged war in West Asia poses downside risk, the central bank said in its Annual Report for 2025-26 (Apr-Mar).

 

"Going forward, India's growth outlook remains positive, though the West Asia conflict and the attendant risks of elevated energy prices, supply chain disruptions, financial market volatility, uncertainty surrounding global trade policies and weather-related disruptions could pose headwinds to growth and inflation in the short run," the central bank said. 

While the global growth outlook has moderated, the Indian economy is seen as strong because of robust domestic demand, relatively lower dependence on exports as a growth driver, and a stable policy environment, the RBI said. India's GDP growth for FY26 is estimated at 7.6%, and growth is seen slowing to 6.9% in the current financial year. 

 

"The healthy balance sheets of the corporate and banking sectors along with the government's continued thrust on capital expenditure bode well for India's strong growth trajectory," the RBI said.  

 

The government aims to spend INR 12.22 trillion as capital investment in FY27, up 11.5%, in line with the Narendra Modi government's thrust on capital expenditure to drive economic growth. The government has increased capital expenditure by over six times since FY15. 

 

Implementation of various trade agreements with key trading partners would provide further momentum to India's growth, the central bank said. "While ongoing geopolitical conflicts and policy uncertainty pose downside risks to India's merchandise exports, implementation of trade agreements with several trade partners and a sharp focus on scaling domestic manufacturing in strategic and frontier sectors would strengthen export competitiveness and reduce critical import dependence," it said. 

 

India is facing the worst energy crisis in decades due to the war in West Asia, and this has clouded the outlook for growth in FY27. Crude oil prices have risen 60% following the closure of the Strait of Hormuz in early March. Nearly half of India's crude and natural gas imports pass through this crucial waterway. 

 

"The recently concluded India-EU free trade agreement, along with discussions on the India-US trade deal and several other trade agreements, are expected to support exports over the medium term," RBI said. 

 

That said, moderation in agricultural and allied sector activity due to weather-related events, coupled with headwinds such as persistent geopolitical tensions, an uncertain trade environment, and volatility in financial markets, continues to pose downside risks to growth outlook. "...in a highly uncertain global environment, continuous assessment of the evolving developments is warranted to frame the appropriate policy response on an ongoing basis," the central bank said.  End

 

Reported by Priyasmita Dutta and Shubham Rana

Edited by Avishek Dutta

 

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