The Reserve Bank of India (RBI) has said there is strong reason to stay positive about India’s economic future. Despite global tensions and uncertainty, India is expected to remain the world’s fastest-growing major economy in 2025–26.
In its latest monthly bulletin, the RBI said India’s economy is supported by strong domestic demand, a stable banking system, and improving financial conditions. The central bank estimates that India’s economy will grow 7.4% in 2025–26, higher than the 6.5% growth recorded in 2024–25. Real Gross Value Added (GVA) is expected to rise by 7.3%.
The RBI noted that private consumption and fixed investment continue to support growth. Manufacturing activity is likely to recover strongly, while the services sector remains steady and healthy. High-frequency data for December also shows positive momentum, with rural demand improving and urban consumption slowly recovering.
Inflation rose slightly in December but stayed below the RBI’s lower tolerance level for the fourth month in a row. This increase was mainly due to reduced food price deflation and a mild rise in core inflation, influenced largely by precious metal prices.
The RBI said credit flow to businesses has increased over the past year, with both banks and non-bank lenders contributing to higher lending. This has helped support investment and business activity.
On the external front, India’s position remains strong. The country has comfortable foreign exchange reserves, a manageable current account deficit, and a better international investment position. The RBI also highlighted India’s efforts to diversify exports and reduce risks from global shocks.
India is currently involved in trade talks with 14 countries and groups, including the EU, the US, and GCC nations. Trade deals with New Zealand and Oman were completed in December 2025.
The RBI added that recent reforms in taxation, labour markets, and the financial sector will further strengthen India’s long-term growth prospects.
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