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India is set to retain its position as the world's fastest-growing major economy in 2025-26, with GDP growth projected at 6.5%-6.7%, according to the RBI bulletin. Strong capital expenditure, rising rural demand, and improving corporate performance are driving growth. Inflation eased to 4.3% in January, supporting economic stability. Key indicators, including industrial output and consumer spending, show positive trends. However, global trade uncertainties and FPI outflows have pressured equity markets and the rupee. Despite these challenges, India’s robust macroeconomic fundamentals are expected to sustain growth. The RBI warns that increasing US trade policy uncertainties could impact global trade patterns, affecting business and consumer costs.

Key Highlights

* India’s GDP growth projected at 6.5%-6.7% for 2025-26.

* Retail inflation eased to 4.3%, aiding economic stability.

* Rural and urban demand show strong growth momentum.

* Equity markets face pressure due to FPI outflows and global uncertainties.

* India’s macroeconomic fundamentals remain strong despite external challenges.

India’s economy remains on a strong growth trajectory, with GDP projected to expand at 6.5%-6.7% in 2025-26, according to the latest RBI bulletin. This growth is backed by robust capital expenditure, rising household incomes, and steady corporate performance. The government’s fiscal measures have maintained a balance between economic expansion and fiscal consolidation, ensuring continued momentum.

Retail inflation eased to a five-month low of 4.3% in January, mainly due to a sharp drop in vegetable prices. Industrial activity is also picking up, with the Purchasing Managers’ Index (PMI) reflecting increased manufacturing and services output. Rural demand remains strong, with FMCG sales in rural areas rising by 9.9% in Q3, signaling higher farm incomes and improved consumption trends. Urban demand is also recovering, supported by increased consumer spending.

Corporate performance has strengthened, with listed companies reporting higher sales and profit margins. Investment sentiment remains stable, with banks and financial institutions approving nearly Rs.1 lakh crore in projects during Q3. External Commercial Borrowings (ECBs) and IPOs have also seen an uptick, reflecting investor confidence in India’s growth prospects.

Despite strong fundamentals, external factors pose challenges. Global trade uncertainties and geopolitical tensions have led to selling pressure from Foreign Portfolio Investors (FPIs), impacting equity markets. The Indian rupee has depreciated alongside other emerging market currencies due to a strong US dollar. The RBI warns that rising US trade policy uncertainty could impact global trade, influencing India’s external sector performance.

Finally

India’s economy remains resilient, driven by strong domestic demand and fiscal policies. Despite global uncertainties, robust fundamentals position the country for sustained growth in 2025-26, reinforcing its status as the fastest-growing major economy.

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