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RBI Forecasts India to Remain Fastest-Growing Economy in 2025-26

Strategic Insights

— 2 min read

Despite global challenges, including geopolitical tensions and climate shocks, the Reserve Bank of India (RBI) has predicted that India will be the fastest-growing economy globally in 2025-26, with projected real GDP growth of 6.5 per cent. The central bank also expects inflation to remain within the target range of 4 per cent over the next 12 months. The RBI has factored in a sharp fall in food inflation, leading to greater confidence in the alignment of headline inflation with the target.

Key Takeaways:

  • The RBI has projected real GDP growth for 2025-26 at 6.5 per cent, with growth rates of 6.5 per cent in Q1, 6.7 per cent in Q2, 6.6 per cent in Q3, and 6.3 per cent in Q4.
  • Household savings have increased to 11.2 per cent of gross national disposable income (GNDI) in 2023-24, up from 10.7 per cent in the previous year.
  • Net household financial savings improved to 5.1 per cent of GNDI in 2023-24, from 4.9 per cent in the previous year.
  • RBI has projected a 4 per cent CPI inflation for 2025-26, with Q1 at 3.6 per cent, Q2 at 3.9 per cent, Q3 at 3.8 per cent, and Q4 at 4.4 per cent.
  • Economists and market analysts expect further rate cuts by the RBI to support economic growth.
  • State Bank of India's Soumya Kanti Ghosh expects FY25 GDP to stand at 6.3 per cent, with growth ranging between 6.8-7.2 per cent in FY26.
  • Deloitte India's Rumki Majumdar expects growth to range between 6.8-7.2 per cent in FY26, driven by growth in high-frequency indicators.

Statistics:

  • 6.5 per cent: projected real GDP growth for 2025-26
  • 6.5 per cent: growth rate in Q1
  • 6.7 per cent: growth rate in Q2
  • 6.6 per cent: growth rate in Q3
  • 6.3 per cent: growth rate in Q4
  • 4 per cent: projected CPI inflation for 2025-26
  • 3.6 per cent: projected Q1 inflation
  • 3.9 per cent: projected Q2 inflation
  • 3.8 per cent: projected Q3 inflation
  • 4.4 per cent: projected Q4 inflation
  • 6.3 per cent: expected FY25 GDP (State Bank of India's Soumya Kanti Ghosh)
  • 6.8-7.2 per cent: expected growth range in FY26 (Deloitte India's Rumki Majumdar)

Sources:

  • Reserve Bank of India (RBI)
  • State Bank of India (SBI)
  • Deloitte India
  • Infomerics Valuations and Ratings Ltd.

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