India's Growth Momentum Remains Resilient: RBI Bulletin
RBI flags resilience and reform-driven momentum, projecting India to stay the world’s fastest-growing major economy despite global geopolitical and policy risks.
By : DC Correspondent
Update: 2026-01-21 15:34 GMT
New Delhi: The current state of the economy provides ground for optimism going forward and India will remain the fastest growing major economy, notwithstanding elevated geopolitical risks and policy uncertainty ahead, the Reserve Bank of India (RBI) said in its January Bulletin released on Wednesday.
In an article titled 'State of the Economy' published in the Bulletin, the central bank said that the year 2026 began with an escalation of geopolitical tensions, marked by developments such as the US intervention in Venezuela, the simmering conflict in the Middle East, ambiguity surrounding the Russia–Ukraine peace deal, and escalation of the row over Greenland, all of which point to still-elevated geo-economic risks and policy uncertainty ahead.
"Even amidst these global uncertainties, the current state of the economy provides ground for optimism going forward. The GDP growth estimates for 2025-26 indicate that India will remain the fastest growing major economy in the world," said the article.
The article noted that India has made significant efforts to diversify and strengthen its exports, aiming to mitigate external sector risks. The country is currently engaged in trade negotiations with 14 countries or groups, representing nearly 50 nations, including the European Union, Gulf Cooperation Council countries, and the United States.
The month of December saw India concluding trade negotiations with New Zealand and Oman. The year 2025 also witnessed major economic reforms, including the rationalisation of tax structures, implementation of labour codes for labour market reforms, and financial sector deregulation, all of which are expected to strengthen the growth prospects, said the RBI.
It said that the first advance estimates of GDP for 2025-26 reflected the resilience of the Indian economy, driven by domestic factors amidst a challenging external environment. The economy is projected to grow 7.4 per cent in the current financial year, supported by strong manufacturing and services activity, healthy household consumption, and robust fixed-asset investment. This follows a growth of 6.5 per cent in FY25 and 9.2 per cent in FY24.
High frequency indicators for December suggest continued buoyancy in growth impulses with demand conditions remaining upbeat.
Headline CPI inflation edged up in December but remained below the lower tolerance level.
The RBI said that there has been a significant improvement in the flow of financial resources to the commercial sector over the past year, driven by contributions from both bank and non-bank sources. During 2025–26 so far, up to December 31, total financial flows to the commercial sector rose to ₹30.8 lakh crore, compared with ₹21.3 lakh crore in the same period a year earlier.
Non-bank sources, including corporate bond issuances and foreign direct investment (FDI), recorded a marked increase. As of December 31, 2025, total outstanding credit to the commercial sector rose by 15 per cent, with non-bank credit growing at a faster pace of 16.4 per cent.
On the external front, the RBI said the Indian rupee depreciated in December amid foreign portfolio outflows and uncertainty over the India–US trade deal, though currency volatility remained lower than that of most major peers.
The article noted that India has made significant efforts to diversify and strengthen its exports, aiming to mitigate external sector risks. The country is currently engaged in trade negotiations with 14 countries or groups, representing nearly 50 nations, including the European Union, Gulf Cooperation Council countries, and the United States.
The month of December saw India concluding trade negotiations with New Zealand and Oman. The year 2025 also witnessed major economic reforms, including the rationalisation of tax structures, implementation of labour codes for labour market reforms, and financial sector deregulation, all of which are expected to strengthen the growth prospects, said the RBI.
It said that the first advance estimates of GDP for 2025-26 reflected the resilience of the Indian economy, driven by domestic factors amidst a challenging external environment. The economy is projected to grow 7.4 per cent in the current financial year, supported by strong manufacturing and services activity, healthy household consumption, and robust fixed-asset investment. This follows a growth of 6.5 per cent in FY25 and 9.2 per cent in FY24.
High frequency indicators for December suggest continued buoyancy in growth impulses with demand conditions remaining upbeat.
Headline CPI inflation edged up in December but remained below the lower tolerance level.
The RBI said that there has been a significant improvement in the flow of financial resources to the commercial sector over the past year, driven by contributions from both bank and non-bank sources. During 2025–26 so far, up to December 31, total financial flows to the commercial sector rose to ₹30.8 lakh crore, compared with ₹21.3 lakh crore in the same period a year earlier.
Non-bank sources, including corporate bond issuances and foreign direct investment (FDI), recorded a marked increase. As of December 31, 2025, total outstanding credit to the commercial sector rose by 15 per cent, with non-bank credit growing at a faster pace of 16.4 per cent.
On the external front, the RBI said the Indian rupee depreciated in December amid foreign portfolio outflows and uncertainty over the India–US trade deal, though currency volatility remained lower than that of most major peers.
The article said that during April-November 2025, foreign direct investment (FDI) remained higher than in the same period last year, both in gross and net terms. Gross inward FDI remained steady in November with Japan, Singapore, and the US accounting for more than 75 per cent of total FDI inflows. However, net FDI remained negative in November for the third consecutive month, mainly due to high repatriation.