Despite global uncertainties around tariffs, the Indian economy remains resilient, supported by strong macroeconomic fundamentals, the Reserve Bank of India (RBI) said on Wednesday.
Easing inflation, better kharif season prospects, front-loading of government spending, targeted fiscal measures, and favourable financial conditions for faster rate cuts will support aggregate demand, the RBI Bulletin’s ‘State of the Economy’ report noted.
“Amid rising trade uncertainties and geo-economic fragmentation, building resilient trade partnerships presents a strategic opportunity for India to deepen its integration with global value chains. Measures to accelerate domestic investment in infrastructure and structural reforms aimed at improving competitiveness and productivity would strengthen resilience and support growth momentum,” the central bank stated.
Earlier, a Morgan Stanley report projected that the Indian economy will be the third-largest globally by 2028 and will more than double to $10.6 trillion by 2035.
The Asian Development Bank (ADB) forecast India’s GDP growth at 6.5 per cent in 2025 and 6.7 per cent in 2026, driven by strong domestic demand, a normal monsoon, and monetary easing.
Inflation is likely at 3.8 per cent in 2025 and 4.0 per cent in 2026, staying within the RBI’s targets, the ADB said.
According to the RBI Bulletin, intense negotiations are ongoing to close trade deals before new import tariff rates take effect on 1 August 2025. The focus has shifted to US trade policies and their global impact.
“Financial markets seem to have taken trade policy uncertainties in stride, possibly reflecting optimism on reaching deals that are less disruptive to the global economy,” the RBI added.
However, it warned, “Underpricing of macroeconomic risk by financial markets remains a concern”. The evolving pattern of global trade and supply chains is unsettled, creating significant headwinds for the global economic outlook, it said.
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