India’s growth momentum to sustain as demand recovers, RBI report says
- Even amidst these global uncertainties, the current state of the economy provides ground for optimism going forward
MUMBAI: High-frequency indicators point to sustained growth momentum, according to the Reserve Bank of India’s latest State of the Economy report released on Wednesday.
High-frequency indicators are data collected frequently, such as goods and services tax (GST) receipts and e-way bills, among others, that point to economic activity.
The central bank noted that overall demand conditions remain strong, driven by a revival in rural demand and a gradual recovery in urban demand.
A strong rebound in the manufacturing sector and continued buoyancy in services are expected to boost growth in gross value added.
Retail automobile sales showed broad-based growth across categories due to the cuts in GST, further bolstering rural demand.
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“Even amidst these global uncertainties, the current state of the economy provides ground for optimism going forward,” the report stated.
The GDP growth estimates for 2025-26 indicate that India will remain the fastest-growing major economy in the world, it said.
RBI has projected GDP growth at 7.3% for fiscal year 2026 ending March 31, while for the next fiscal year, growth is expected at 6.7% and 6.8% for the first and second quarters, respectively.
Economic activity continued to register a strong growth in December. E-way bill generation recorded healthy expansion, supported by GST rate rationalisation, alongside stock clearance and firms’ efforts to meet year-end sales targets.
Growth in GST revenue collections was primarily driven by higher import-related GST receipts, the bulletin added.
The International Monetary Fund on Monday revised its growth forecast for India upwards by 0.7 percentage points to 7.3%, citing strong momentum, but said it is likely to slow to 6.4% in the following two fiscal years as cyclical factors fade.
India has also intensified efforts to diversify and reinforce its exports with the aim of mitigating external sector risks amplified by the threat of further tariffs from the U.S., said the report.
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