The Reserve Bank of India has forecast India's GDP growth at 6.5% for the financial year 2025&ndash;26, reflecting resilient domestic economic activity supported by strong agriculture, improving industrial output, and sustained momentum in the services sector.
According to RBI Governor Sanjay Malhotra, quarterly growth is projected at 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4. He noted that the agriculture sector is showing strength with a good harvest in both the kharif and rabi seasons, healthy reservoir levels, and the highest wheat procurement in the past four years ensuring strong food stock levels.
Industrial activity is recovering steadily, though unevenly, while the services sector continues to expand &mdash; as indicated by the Services PMI of 58.8 in May 2025. On the demand front, private consumption remains solid, supported by rising discretionary spending. Urban demand is showing improvement, while rural consumption remains stable.
Investment activity is gaining momentum, bolstered by government capital expenditure, elevated capacity utilisation, and improved business confidence. High-frequency data also points to recovery in investment trends.
Merchandise exports showed robust growth in April 2025 after a weak phase, and non-oil, non-gold imports surged, indicating strong domestic demand. Services exports continue to perform well.
Looking ahead, Malhotra said that an expected above-normal southwest monsoon should further support agriculture and rural demand. Urban consumption is also likely to benefit from continued strength in services.
However, risks to growth remain from global geopolitical tensions, trade policy uncertainties, and weather-related disruptions. Still, potential free trade agreements, such as with the UK, could give a positive push to trade prospects.
Governor Malhotra reaffirmed that India&rsquo;s economic outlook remains strong, supported by demographic strength, digital transformation, and robust domestic demand.&nbsp;

Strong farm output, services, and rising demand to drive India's 2025-26 economic growth momentum

RBI Projects 6.5% GDP Growth for FY2025-26

Strong farm output, services, and rising demand to drive India's 2025-26 economic growth momentum

June 6, 2025 | 17:14 IST