With the Reserve Bank of India and Deloitte both revising growth projections upward, the Indian economy continues to demonstrate remarkable resilience amid global uncertainty and trade turbulence
Our Bureau
Mumbai / New Delhi
Even as the world economy grapples with geopolitical instability, slowing trade, and persistent inflationary pressures, India’s growth trajectory continues to stand out. In its latest State of the Economy article published in the October 2025 Bulletin, the Reserve Bank of India (RBI) underscored that the country’s macroeconomic fundamentals remain solid, enabling it to navigate global headwinds with confidence. The central bank’s assessment was echoed by Deloitte India, which has raised its GDP forecast for FY2025-26 by 30 basis points to 6.8 percent, reflecting optimism that India’s recovery momentum will sustain through the year.
The RBI report highlighted that India’s resilience stems from the robustness of its underlying macroeconomic structure—low inflation, healthy corporate and banking balance sheets, strong foreign exchange reserves, and a credible monetary and fiscal policy framework. “While the Indian economy is not immune to global headwinds, it has so far exhibited resilience,” the RBI noted, adding that durable fundamentals have anchored growth even as advanced economies face rising fiscal risks and protectionist pressures.
Nonetheless, the RBI maintained an optimistic tone, emphasizing that structural reforms and domestic demand have shielded the economy from external shocks. “The need for economic resilience has become a key priority,” the bulletin said, pointing to India’s foreign exchange reserves—adequate to cover more than 11 months of imports and nearly 93 percent of external debt as of June 2025—as a vital cushion against volatility.
Deloitte India’s latest outlook aligns closely with the RBI’s cautious optimism. The consultancy raised its GDP growth projection for FY2025-26 to 6.8 percent, up 0.3 percentage points from its earlier estimate, citing strong domestic demand, improving rural sentiment, and low inflation as primary drivers. India’s GDP had already grown by an impressive 7.8 percent in the April-June quarter—well above market expectations—providing a strong base for the remainder of the fiscal year.
“India’s performance signals not just resilience but a renewed sense of strength,” said Rumki Majumdar, economist at Deloitte India. “Similar growth rates are expected in the subsequent year, although uncertainties around trade and investment could widen the range of variation.”
Deloitte attributes the optimistic forecast to a combination of factors: robust consumer spending, accommodative monetary conditions, and ongoing reforms such as GST 2.0, which is expected to further streamline the tax regime. A strong rural confidence index—hovering above 100—suggests buoyant sentiment in rural areas, bolstered by favorable monsoon patterns and improved crop output.
The firm also noted that the upcoming festive season could provide a significant boost to consumption spending, while corporate investment is likely to accelerate as businesses gear up to meet growing demand.
Despite the upbeat projections, both the RBI and Deloitte caution that India’s growth remains vulnerable to global shocks. Escalating trade tensions, supply chain disruptions, and geopolitical frictions could undermine export performance. Deloitte warned that India’s inability to finalize key trade agreements with the United States and the European Union could dampen investor sentiment and slow capital inflows.
“India is no island,” Majumdar observed. “Global risks will inevitably weigh on its economic outlook.” While headline inflation has eased due to lower food and fuel prices, core inflation remains stubbornly above 4 percent—posing challenges for the RBI’s monetary policy stance.
India’s economic resilience is not accidental—it is the outcome of a sustained focus on macroeconomic stability, prudent policy management, and structural reform. Over the past four years, India has consistently outperformed major global economies, posting growth rates of 9.2 percent in 2023-24, 6.5 percent in 2024-25, and an estimated 7.8 percent in the first quarter of FY2025-26.
According to the Economic Survey 2024-25, the GDP growth projection for 2025-26 was set between 6.3 and 6.8 percent, and current data suggests that the economy is tracking the upper end of that range. The RBI’s latest assessment reinforces this view, projecting FY2025-26 GDP growth at 6.8 percent while maintaining inflation at a comfortable 2.6 percent—well within its target band.
For policymakers, the challenge will be to sustain this momentum while navigating an increasingly uncertain global landscape. Strengthening supply chains, diversifying export markets, and accelerating infrastructure investments will be key to maintaining growth above 6.5 percent in the medium term.
At the same time, continued fiscal discipline and monetary prudence will be essential to preserve investor confidence and macroeconomic stability.
The twin assessments from the RBI and Deloitte present a cautiously optimistic picture of India’s economy—one that is grounded in reality yet confident in its trajectory. With steady domestic demand, robust policy support, and a resilient financial system, India remains poised to retain its position as the world’s fastest-growing major economy.
