RBI estimates GDP growth in FY 2025-26 at about 6.7%, inflation at 4.2%

The Reserve Bank of India (RBI) on Friday projected India's real GDP growth for the next fiscal year at around 6.7%, with economic momentum expected to remain steady across quarters.

“The risks are evenly balanced,” RBI Governor Sanjay Malhotra said in his Monetary Policy Committee (MPC) briefing.

Household consumption is projected to remain robust, aided by tax relief measures announced in the Union Budget 2025-26. Fixed investment is expected to pick up, supported by higher capacity utilisation, strong balance sheets of financial institutions and corporates, and continued government focus on capital expenditure, according to the monetary policy statement.

Malhotra said that positive business sentiments from the RBI’s enterprise surveys and Purchasing Managers' Index (PMI) readings also point to economic resilience.

However, the RBI flagged potential downside risks, including geopolitical tensions, protectionist trade policies, volatile international commodity prices, and financial market uncertainties.

The RBI projected Consumer Price Index (CPI) inflation at 4.8% for 2024-25, with Q4 inflation at 4.4%. Assuming a normal monsoon, CPI inflation for 2025-26 is expected to moderate further to 4.2%, with quarterly projections of 4.5% in Q1, 4% in Q2, 3.8% in Q3, and 4.2% in Q4.