RBI Forecasts 6.5% GDP Growth for FY 2025–26, Citing Broad-Based Economic Resilience
Mumbai | June 6, 2025 – The Reserve Bank of India (RBI) has forecasted India’s GDP growth at 6.5% for the financial year 2025–26, reflecting a resilient domestic economy supported by strong agricultural output, improving industrial performance, and sustained momentum in the services sector.
According to RBI Governor Sanjay Malhotra, the Indian economy continues to hold firm in the face of global headwinds, showing signs of broad-based recovery across key sectors.
Quarterly Growth Estimates for FY26
The RBI has projected the following quarterly growth rates for FY 2025–26:
- Q1 (April–June): 6.5%
- Q2 (July–September): 6.7%
- Q3 (October–December): 6.6%
- Q4 (January–March): 6.3%
These projections align with the provisional estimates from the National Statistical Office (NSO), which also placed India’s real GDP growth at 6.5% for 2024–25.
Agriculture Sector Remains Strong
Governor Malhotra highlighted that the agriculture sector remains a cornerstone of the economy’s strength. With bountiful kharif and rabi harvests, major food crops are in ample supply.
“Reservoir levels are healthy, and wheat procurement has reached the highest level in the last four years, ensuring a strong stock position,” Malhotra noted.
This robust agricultural performance is expected to support rural consumption and inflation stability in the coming months.
Industrial Recovery Underway, Though Uneven
Industrial activity is on an upward trajectory, albeit with uneven recovery across sub-sectors. High-frequency indicators point toward improving production and investment trends.
At the same time, services PMI stood at 58.8 in May 2025, indicating strong expansion and underscoring the resilience of the services sector — a key contributor to GDP.
Private Consumption and Investments Rebounding
The RBI also observed a steady rebound in private consumption, which remains the mainstay of aggregate demand.
“Discretionary spending is gradually increasing, and rural demand has stayed steady while urban demand is improving,” the Governor stated.
On the investment side, capacity utilisation levels are improving, and capital expenditure (capex) by the government continues to be a growth driver.
Trade Performance Shows Mixed Signals
After a sluggish performance in recent quarters, merchandise exports saw strong growth in April 2025. At the same time, non-oil, non-gold imports posted double-digit growth, indicating buoyant domestic demand.
Services exports remain a bright spot and are continuing on a robust growth path. However, uncertainty in global trade policy still weighs on the outlook for merchandise exports.
The RBI noted that progress on trade agreements, especially with the United Kingdom, could help boost goods and services trade in the near future.
Weather, Global Risks Could Affect Outlook
Governor Malhotra acknowledged the risks posed by global geopolitical tensions, weather-related uncertainties, and prolonged trade disruptions.
Nevertheless, the expected above-normal southwest monsoon could provide additional support to the agriculture sector and rural demand, offering some cushion to these risks.
Outlook: Optimism With Caution
The RBI remains cautiously optimistic about India’s economic trajectory in FY 2025–26. With elevated capex, rising business confidence, and easing financial conditions, the foundation for sustained growth appears solid.
“The sustained buoyancy in services and improvement in manufacturing, coupled with stable inflation and supportive monetary policy, point toward a steady expansion path,” Malhotra concluded.