The RBI has projected India’s GDP growth at 6.5 per cent for 2025-26, with domestic economic activity showing resilience on the back of a strong agriculture sector, industry picking up, and the services sector expected to maintain momentum.
The quarterly growth rates projected for the financial year are: Q1 at 6.5, Q2 at 6.7, Q3 at 6.6 and Q4 at 6.3 per cent. “The provisional estimates released by the National Statistical Office (NSO) placed India’s real GDP growth in 2024-25 at 6.5 per cent.
During 2025-26 so far, domestic economic activity has exhibited resilience. The agriculture sector remains strong. With a very good harvest in both the kharif as well as rabi cropping seasons, the supply of major food crops is comfortable.
The reservoir levels remain healthy. The highest procurement of wheat in the last four years provides a comforting stock position,” RBI Governor Sanjay Malhotra said on Friday. Industrial activity is gradually increasing, even though the pace of recovery is uneven.
The services sector is expected to maintain momentum. PMI services stood strong at 58.8 in May 2025, indicating robust expansion in activity, he pointed out. The RBI Governor stated that on the demand side, private consumption, the mainstay of aggregate demand, remains healthy, with a gradual rise in discretionary spending.
Rural demand remains steady, while urban demand is improving. Investment activity is reviving as reflected by high-frequency indicators. Merchandise exports recorded a strong growth in April 2025 after a lacklustre performance in the recent past.
Non-oil, non-gold imports posted a double-digit growth, reflecting buoyant domestic demand conditions. Services exports continue on a strong growth trajectory, he explained. Malhotra further stated that going forward, the outlook for the agriculture sector and rural demand is expected to receive further impetus from the expected above-normal southwest monsoon rainfall.
On the other hand, sustained buoyancy in services activity should nurture revival in urban consumption. The government’s continued thrust on capex, elevated capacity utilisation, improving business optimism, and easing financial conditions should help further revive investment activity, he observed.
Trade policy uncertainty, however, continues to weigh on merchandise exports prospects, while the conclusion of a free trade agreement (FTA) with the United Kingdom and progress with other countries should provide a fillip to trade in goods and services, the RBI Governor pointed out.
He also said that spillovers emanating from protracted geopolitical tensions, global trade and weather-related uncertainties pose downside risks to growth.