New Delhi

India’s economy is likely to remain on a strong growth path despite mounting global uncertainties, supported by steady macroeconomic management and ongoing structural reforms, according to a report released by the Reserve Bank of India.

The report noted that 2025 marked a significant turning point in global trade, as several countries shifted towards bilateral negotiations on tariffs and trade terms. These changes have begun to reshape global trade patterns and supply chains, creating uncertainty and raising concerns about the outlook for global growth. While India has not been completely insulated from these external pressures, the RBI observed that sustained attention to macroeconomic stability and reforms would help improve efficiency and productivity, enabling the economy to maintain a high growth trajectory in a rapidly evolving global environment.

A favourable inflation outlook has also created room for monetary policy to support economic expansion. The RBI emphasised that continued reforms and sound macroeconomic fundamentals are expected to further strengthen India’s growth momentum.

On financial markets, the central bank pointed out that equity markets stayed largely upbeat for most of the year, driven by optimism surrounding major technology companies. However, rising valuation concerns have recently triggered some risk aversion, with portfolio investments into emerging markets slowing amid heightened global caution.

The report referred to the Monetary Policy Committee’s December 5 resolution, which raised India’s GDP growth forecast for 2025–26 by 50 basis points to 7.3 per cent, compared to the 6.8 per cent estimate given in the October bi-monthly review. At the same time, the inflation projection for the same period was lowered by 60 basis points to 2.0 per cent from 2.6 per cent earlier.

High-frequency indicators for November suggested that domestic economic activity remained resilient, with strong demand conditions. Although headline CPI inflation saw a marginal uptick, it stayed below the lower tolerance threshold. Financial conditions continued to be supportive, and credit flow to the commercial sector remained stable.

The RBI also highlighted an improvement in the current account balance during the second quarter of 2025–26, aided by a narrower merchandise trade deficit, robust services exports and healthy remittance inflows.

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Overall, the central bank underscored that India is well-equipped to manage global headwinds while sustaining robust economic growth.