India Set to Stay World’s Fastest-Growing Prime Economy in 2025-26: RBI Report

Last Updated May - 30 - 2025, 02:19 PM | Source : Fela News

RBI projects 6.5% GDP growth and 4% inflation for 2025-26, highlighting strong fundamentals but warning of global risks.

According to the Reserve Bank of India’s (RBI) latest yearly report for 2024-25, India is composed to keep its status as the fastest-growing prime economy in the world during 2025-26. This positive outlook is grounded in sound macroeconomic fundamentals, a sturdy economic sector, and the government’s continued focus on capital expenses. The record adds that a pickup in private use, along with stronger bank and corporate balance sheets, is expected to drive steady economic impetus.

The RBI has projected real GDP growth at 6.5% for the upcoming accounting year, while the consumer price index (CPI) inflation is expected to average around 4%. Hopefully, the report points to easing supply chain pressures, a likely above-normal southwest monsoon, and the softening of global commodity prices as positive signs for keeping inflation in check. Headline inflation already eased to 4.6% in 2024-25, thanks in large part to a significant depression in food prices earlier this year. This gives the central bank more confidence in achieving a durable alignment of inflation with its 4% target.

However, the RBI didn’t shy away from mentioning potential challenges. It picks out geopolitical tensions, global financial market instability, and rising protectionist trade policies as key risks that could threaten growth and push inflation higher. In light of this, the RBI emphasized that financial policy should remain growth-supportive, yet watchful to the rapidly shifting global economic landscape.

On the financial markets front, the report observed that despite a correction in the second half of 2024, Indian equity markets are expected to remain stable and strong, supported by the country’s balanced macroeconomic environment and more reasonable stake valuations. The RBI also distinguished that resource mobilization through the primary market is likely to regain pace, as investor sentiment improves in a more stable secondary market.

Overall, while the RBI remains optimistic about India's economic future, it also calls for cautious optimism, urging policymakers and investors preferred to stay prepared for potential global changes.