The Reserve Bank of India upgraded its economic forecast for 2025-26 to 6.8 percent from 6.5 percent after goods and services tax reforms counterbalanced international trade challenges. Governor Sanjay Malhotra said the first quarter expansion reached 7.8 percent from consumer spending and business investment, while manufacturing output recovered. Agricultural production remains strong after favorable monsoon rains supported rural communities and urban consumption gradually improves.
The central bank expects quarterly growth of 7.0 percent in the second period before slowing to 6.4 percent and 6.2 percent in subsequent quarters. Government spending increased substantially from April through July as construction materials consumption stayed healthy despite slower capital goods demand. Trade uncertainties and geopolitical conflicts threaten export markets, while financial turbulence could harm growth prospects going forward.
The central bank expects quarterly growth of 7.0 percent in the second period before slowing to 6.4 percent and 6.2 percent in subsequent quarters. Government spending increased substantially from April through July as construction materials consumption stayed healthy despite slower capital goods demand. Trade uncertainties and geopolitical conflicts threaten export markets, while financial turbulence could harm growth prospects going forward.
