India's GDP Projected to Grow at 6.5% in FY 2025-26: RBI Annual Report
New Delhi, May 29, 2025 — India is poised to maintain its position as the world’s fastest-growing major economy with a projected real GDP growth of 6.5% in FY 2025-26, according to the Reserve Bank of India’s (RBI) Annual Report 2024-25 released on Thursday. The report highlights strong macroeconomic fundamentals, structural reforms, and targeted government initiatives as key drivers of sustained growth despite global headwinds.
Growth Outlook: Steady Momentum Amid Global Uncertainties
The RBI emphasized that risks to the growth outlook remain evenly balanced, even as the global landscape continues to grapple with geopolitical tensions, trade fragmentation, financial market volatility, and climate-related challenges.
“The Indian economy is well-positioned to remain resilient in FY 2025-26 by leveraging its robust financial sector, sound macroeconomic framework, and policy commitment to sustainable growth,” said the RBI in its report.
Key contributors to this positive outlook include:
- Revival in consumption demand
- Government’s continued focus on capital expenditure
- Healthy corporate and banking sector balance sheets
- Easing financial conditions
- Strength in services and manufacturing sectors
Agricultural Sector: Buoyed by Monsoon and Reforms
The agriculture sector is expected to benefit from above-normal south-west monsoon forecasts and productivity-enhancing policies rolled out by the government. The Union Budget 2025-26 announced several new initiatives aimed at boosting agricultural productivity and farmer income.
“The prospects for the agriculture sector appear favourable in 2025-26,” noted the RBI, pointing to its role in supporting overall economic stability.
Manufacturing & ‘Make in India’: Stronger Policy Push
India’s manufacturing sector is projected to gain further traction in FY 2025-26, thanks to:
- Rising domestic demand
- Higher capacity utilization
- Resilient corporate performance
- Continued optimism among consumers and businesses
The government’s Production Linked Incentive (PLI) scheme and the National Manufacturing Mission, introduced in the Union Budget, are seen as key enablers in expanding the manufacturing base and reinforcing the ‘Make in India’ initiative.
“Manufacturing optimism is reflected in forward-looking surveys conducted by the RBI,” the report said.
Services Sector & Financial Resilience: Key Pillars
The services sector continues to display remarkable resilience and remains a significant pillar of India’s growth story. Improved sentiment among consumers and businesses, along with healthy credit growth and fiscal consolidation, are expected to reinforce the sector’s strength.
Despite multiple global headwinds in FY 2024-25, the Indian financial markets maintained stability and orderly functioning. The current account deficit (CAD) remained sustainable, thanks to robust services exports and steady remittance inflows that helped offset the merchandise trade deficit.
Fiscal Health: Consolidation With Growth
The central government sustained its focus on fiscal consolidation, supported by buoyant tax revenues and prudent spending. According to the RBI, financial stability was preserved, and inflation was kept in check amid supply-side disruptions and global price shocks.
Final Outlook: Balanced Yet Optimistic
While the RBI remains cautious of global uncertainties and climate-induced risks, the Indian economy’s trajectory remains optimistic, driven by:
- Robust domestic demand
- Government policy support
- Resilient services and manufacturing sectors
- External sector stability