India Set to Lead Global Growth in 2025-26, Says RBI

New Delhi : India is poised to retain its position as the world’s fastest-growing major economy in the financial year 2025–26, according to the Reserve Bank of India’s (RBI) annual report released on Friday. The central bank highlighted several positive economic indicators that underpin this optimistic projection, including robust private consumption, a stable financial ecosystem, and strong public investment.

The RBI noted that an uptick in private consumption—particularly in urban areas—is expected to fuel demand across sectors. Additionally, the healthy balance sheets of banks and corporates, coupled with easing financial conditions and the government’s sustained emphasis on capital expenditure, are projected to sustain economic momentum into the next fiscal year.

“India’s macroeconomic fundamentals remain resilient. Supported by a favourable policy environment and increasing investor confidence, the economy is expected to continue its high-growth trajectory in 2025–26,” the RBI stated.

The manufacturing sector is projected to see further expansion, driven by rising domestic demand and higher capacity utilisation. The report emphasized the role of improved consumer and business sentiment, which is already evident through strong indicators in key manufacturing and infrastructure sectors.

The RBI also highlighted the government’s efforts to deepen India’s manufacturing ecosystem. Notably, initiatives like the Production Linked Incentive (PLI) scheme and the National Manufacturing Mission—outlined in the Union Budget 2025–26—are seen as critical enablers of growth. These schemes aim to enhance productivity, attract foreign investment, and reduce dependency on imports, thereby strengthening the ‘Make in India’ movement.

In terms of inflation, the RBI projected a moderate outlook, with price stability expected to support sustainable growth. The report stressed the need to remain vigilant on external headwinds, including geopolitical tensions, global commodity price volatility, and financial market fluctuations, which could pose challenges to the growth narrative.

India’s economic growth in recent years has outpaced that of other major economies, and this trend is likely to continue, making the country a key driver of global economic momentum. The report concluded by emphasizing the need for continued structural reforms, digital infrastructure development, and employment generation to ensure inclusive growth.