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India’s Economic Engine Roars: 6.5% Growth Leaves Rivals in the Dust

Updated: April 28, 2025 09:00

Image Source: Business Today
India is set to remain the world’s fastest-growing major economy in 2025–26, with the Reserve Bank of India (RBI) projecting a robust 6.5% GDP growth despite mounting global uncertainties and trade tensions.
 
Key Highlights:
  • Growth Forecast Trimmed, Still Strong: The RBI revised its GDP growth estimate for FY26 down from 6.7% to 6.5%, citing rising global trade frictions and new US tariffs as primary headwinds. Despite the cut, India’s growth rate remains the highest among major economies and is broadly in line with recent trends.
  • Quarterly Growth Outlook: RBI expects GDP growth to be 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4 of FY26. This reflects a cautious optimism, balancing domestic resilience with external risks.
  • Interest Rate Cut & Policy Shift: To support growth, the RBI reduced the repo rate by 25 basis points to 6% and shifted its policy stance to ‘accommodative’, signaling possible further easing if conditions demand.
  • Domestic Drivers Stay Resilient: Strong domestic demand, healthy agricultural output due to good reservoir levels, and a revival in manufacturing are expected to cushion the economy. The services sector continues to show resilience, and robust remittance inflows are helping offset trade deficits.
  • Inflation Under Control: Retail inflation has eased to a seven-month low of 3.61%, below the RBI’s 4% target, thanks to declining food prices and record crop production. The RBI projects inflation to remain within comfort levels at 4% for FY26.
  • Risks Remain: The RBI warns that global volatility, especially from US tariff actions and financial market swings, could pose further challenges. Merchandise exports may face headwinds, but services exports are expected to stay strong.
India’s economic fundamentals remain sound, with the central bank confident that ongoing reforms, government capital expenditure, and strong corporate and banking sector balance sheets will help the country weather global storms and sustain its growth momentum.
 
Sources: Moneycontrol, India Today, Business Standard

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