The Reserve Bank of India sees the country’s GDP growth at 6.7 per cent in FY26 on the expectations of agricultural activity remaining upbeat and manufacturing recovering gradually in the second half of this year.
“Agricultural activity remains upbeat on the back of healthy reservoir levels and bright rabi prospects. Manufacturing activity is expected to recover gradually in the second half of this year and beyond. Early corporate results for Q3 indicate a mild recovery in the manufacturing sector.9 Mining and electricity are rebounding from monsoon related disruptions in Q2. Business expectations remain upbeat, as evidenced from the PMI manufacturing future output index.10 Services sector activity continues to be resilient,” RBI governor Sanjay Malhotra said in the Monetary Policy statement.
Taking all these factors into consideration, real GDP growth for the next year is projected at 6.7 per cent with Q1 at 6.7 per cent; Q2 at 7.0 per cent; Q3 at 6.5 per cent; and Q4 at 6.5 per cent, the statement said. The risks are evenly balanced.
“Higher capacity utilisation levels, robust business expectations and government policy support augur well for growth in fixed investment. Continued buoyancy in services exports will support growth. Global headwinds, however, continue to impart uncertainty to the outlook and pose downward risks,” it said.
Current fiscal
Going ahead, food inflation pressures, absent any supply side shock, should see a significant softening due to good kharif production, winter-easing in vegetable prices and favourable rabi crop prospects, RBI governor Sanjay Malhotra said in the Monetary Policy statement.
As per the first advance estimates, real GDP growth for the current year is estimated at 6.4 per cent, a softer expansion after a robust 8.2 per cent growth last year. PMI services, however, declined from its recent peak. On the demand side, rural demand continues to be on an uptrend, while urban consumption remains subdued with high frequency indicators providing mixed signals.”Going forward, improving employment conditions, tax relief in the Union Budget, and moderating inflation, together with healthy agricultural activity bode well for household consumption. Government consumption expenditure is expected to remain modest,” it said.
The RBI’s first monetary policy of 2025 brings a 25 bps repo rate cut to 6.25 per cent. Governor Sanjay Malhotra’s first policy also introduced market liquidity reforms, expanded trading access, another step towards digital security with the ‘bank.in’ domain and enhanced authentication for global transactions.
Excessive volatility in global financial markets and continued uncertainties about global trade policies coupled with adverse weather events pose risks to the growth and inflation outlook, it warned.
