India poised to remain fastest growing major economy in FY26: RBI

RBI predicts India to remain fastest-growing economy in FY26, with supportive monetary policy and manageable risks.

The country is poised to remain the fastest growing major economy in the world even in FY26, the Reserve Bank said on Thursday (May 29, 2025).

The benign inflation outlook and a “moderation” in GDP expansion warrant the monetary policy to be supportive of growth going forward, the RBI said in its annual report.

“...the Indian economy is poised to remain the fastest-growing major economy in 2025-26 by leveraging its sound macroeconomic fundamentals, robust financial sector and commitment towards sustainable growth,” the RBI said in the latest report.

It flagged global financial market volatility, geopolitical tensions, trade fragmentation, supply-chain disruptions and climate-induced uncertainties as factors posing downside risks to the growth outlook and also upside risks to the inflation outlook.

However, factors like easing of supply-chain pressures, softening global commodity prices and higher agricultural production on above-normal south west monsoon augur well for inflation outlook, the central bank said.

Shifts in tariff policies may result in sporadic episodes of volatility in financial markets, it said, adding that exports may encounter headwinds on “inward-looking policies and tariff-wars”.

The trade pacts being signed and negotiated by India will help ensure that the impact is limited, the RBI said, adding that services exports and inward remittances will help ensure that the current account deficit is “eminently manageable” in the new fiscal.