Indian Economy Poised For Strong Growth In FY26: RBI Annual Report
The Reserve Bank of India (RBI), in its Annual Report for 2024-25, released on Thursday, expressed confidence in the Indian economy’s prospects for the financial year 2025-26, citing a range of supportive macroeconomic indicators and policy initiatives. The central bank expects the economy to maintain its growth momentum, backed by a revival in consumption demand, sound corporate and banking sector balance sheets, and easing financial conditions.
“The outlook for the Indian economy remains promising in 2025-26, supported by revival in consumption demand, government's continued thrust on capex while adhering to the path of fiscal consolidation,” it said.
The report also pointed to strong macroeconomic fundamentals, the resilience of the services sector, and rising consumer and business confidence as key drivers of the positive outlook. In particular, the National Manufacturing Mission, introduced in the Union Budget 2025-26, is expected to give a significant boost to the ‘Make in India’ initiative by enhancing domestic manufacturing and creating employment opportunities.
India’s expanding footprint in global trade is another contributor to economic strength. The RBI highlighted the country’s participation in 14 Free Trade Agreements (FTAs) and six Preferential Trade Agreements (PTAs), along with ongoing negotiations with the US, EU, Oman, and Peru, as avenues for increased trade flows.
Economy Remains Resilient
During FY2024-25, the economy demonstrated resilience amid global uncertainties, supported by proactive fiscal policies and sustained government capital expenditure, particularly in the post-election period. India’s macroeconomic stability, marked by moderate current account and fiscal deficits, has helped in maintaining the orderly movement of the Indian Rupee (INR).
The report also emphasized India’s focus on developing a robust artificial intelligence (AI) ecosystem to drive innovation and self-reliance in emerging technologies. Additionally, India continues to lead globally in digital payments, with the Unified Payments Interface (UPI) accounting for 48.5 per cent of global real-time payment transactions by volume.
On the financial markets front, the RBI projected continued resilience in Indian equity markets, supported by stable fundamentals and a moderation in valuations. However, it also warned that geopolitical tensions could pose downside risks to the overall economic outlook.
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