New Delhi, February 20: The Indian economy is experiencing robust growth despite global challenges and geopolitical uncertainties.
In its latest bulletin released on Friday, the Reserve Bank of India (RBI) stated that recent trade agreements with the European Union (EU) and a framework for an interim trade agreement with the United States will help sustain India’s growth momentum over the long term.
According to RBI Governor Sanjay Malhotra, a controlled inflation rate provides room to support growth while maintaining financial stability. He emphasized, “We are committed to meeting the productive needs of the economy and sustaining the pace of growth.”
High-frequency economic indicators suggest that strong growth is likely to continue into the third quarter of 2025-26 and beyond.
Malhotra noted in the bulletin, “The signing of the historic trade agreement with the European Union and progress towards a trade agreement with the United States could keep the growth momentum intact for an extended period.”
The Indian economy is consistently moving towards improvement, with a projected real GDP growth rate of 7.4% in 2025-26, significantly higher than the previous year.
Malhotra pointed out that private consumption and sustainable investment have supported growth amid global pressures. However, there has been weakness in net external demand, as imports have outpaced exports. The strong contribution from the services sector and improvements in manufacturing activities are expected to lead to a real GVA growth of 7.3% in 2025-26.
Looking ahead, economic activities are anticipated to remain strong in 2026-27. The agricultural sector will benefit from good reservoir levels, robust rabi sowing, and improved crop conditions.
The RBI Governor stated that better performance in the corporate sector and the ongoing strength of the informal sector will boost manufacturing activities. The growth rate in the construction sector is expected to remain strong, while robust domestic demand will sustain stability in the services sector.
From a demand perspective, the RBI bulletin indicated that private consumption is expected to continue its pace in 2026-27. Improved agricultural activities and better conditions in the rural labor market are contributing to stable rural demand.
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