The Reserve Bank of India (RBI) has projected India’s real GDP growth at 6.9% for FY27, supported by strong macroeconomic fundamentals, healthy corporate and banking sector balance sheets, and continued government-led capital expenditure.
In its Annual Report 2025-26, the central bank said the domestic growth outlook remains positive despite a backdrop of moderate global growth. The RBI noted that the implementation of various trade agreements with key trading partners could provide additional momentum to India’s growth trajectory.
The report highlighted that the government’s continued thrust on infrastructure and capital expenditure is expected to support investment activity and economic expansion. It also pointed to policy support for strategic sectors such as electronics, semiconductors, biopharma, rare earths, chemicals, textiles and capital goods.
However, the RBI cautioned that a prolonged conflict in West Asia remains a key downside risk. According to the report, geopolitical tensions could disrupt supply chains, increase energy prices and create volatility in financial markets, potentially affecting growth prospects.
The central bank also noted that agricultural output in FY27 will remain dependent on the progress and distribution of the southwest monsoon. While the possibility of El Niño conditions poses risks, positive Indian Ocean Dipole conditions later in the season could help offset some adverse effects.
The report added that labour market conditions are expected to improve further, supported by the implementation of labour reforms, strengthening domestic demand and productivity gains.