India is expected to remain the world’s fastest-growing major economy despite persistent global uncertainties, according to the Reserve Bank of India’s latest economic assessment. The central bank said current economic conditions provide strong grounds for optimism, with growth projections for 2025–26 reflecting sustained resilience driven primarily by domestic factors.
The RBI noted that India has taken significant steps to diversify and strengthen its export base in order to mitigate external sector risks. Ongoing trade negotiations with 14 countries and regional groupings, covering nearly 50 nations, including the European Union, Gulf Cooperation Council members, and the United States, are expected to further enhance India’s global trade integration.
Advance estimates of real GDP growth for 2025–26 underscore the strength of domestic demand amid a challenging global environment. High-frequency indicators point to continued momentum, with economic activity remaining buoyant and demand conditions stable.
Inflation dynamics have remained favourable, with headline consumer price inflation edging up recently but staying below the lower tolerance threshold. The RBI observed that the flow of financial resources to the commercial sector has strengthened over the past year, supported by rising credit from both banks and non-bank financial institutions.
Economic reforms undertaken during the year are expected to reinforce India’s medium- to long-term growth prospects. These include rationalisation of tax structures, implementation of labour codes aimed at improving labour market efficiency, and continued deregulation within the financial sector. India has also concluded key trade negotiations with partners such as New Zealand and Oman, further expanding its economic footprint.
The central bank highlighted the robustness of India’s banking system, supported by strong capital buffers, improved asset quality, and healthy profitability. Stress test results from the latest Financial Stability assessment indicated that banks and non-banking financial companies remain well positioned to absorb potential losses even under adverse scenarios, while maintaining capital well above regulatory requirements.
Looking ahead, the RBI emphasised the importance of balancing innovation with financial stability and consumer protection. A prudent regulatory and supervisory framework, the central bank said, will be crucial in enhancing productivity and sustaining long-term economic growth as India consolidates its position as a global growth leader.
