The Indian economy, as per the latest RBI Bulletin, continues to exhibit high growth despite facing uncertainties in the global landscape. Recent trade agreements with the European Union and an interim trade deal framework are expected to bolster growth momentum. Central Bank Governor Sanjay Malhotra emphasized the importance of benign inflation in supporting growth while maintaining financial stability.
High-frequency indicators point towards sustained robust growth in the third quarter of 2025-26 and beyond. Malhotra highlighted the significance of the trade agreements with the EU and the US in ensuring prolonged growth momentum. Real GDP is projected to grow by 7.4% in 2025-26, showcasing a positive trajectory for the Indian economy.
Private consumption and fixed investments have been key drivers of growth, although net external demand has been a drag due to higher imports than exports. The services sector and a revival in manufacturing activities have contributed significantly to real GVA growth, estimated at 7.3% in 2025-26. Economic activity is expected to remain robust in 2026-27, supported by favorable agricultural conditions and a resilient services sector.
The corporate sector’s performance is anticipated to improve, boosting manufacturing activities, while the construction sector is poised for steady growth. Private consumption momentum is expected to continue in 2026-27, with rural demand remaining stable due to enhanced agricultural activities and labor market conditions.
