RBI projects 6.7% growth for FY'26 on better Rabi harvest, tax relief by govt

RBI projects 6.7% growth for 2025-26 fiscal year, driven by strong Rabi prospects and tax relief for households.

Reserve Bank on Friday (February 7, 2025) projected the growth rate for the upcoming financial year at 6.7%, up from 6.4% estimated for the current fiscal ending March.

Healthy Rabi prospects and an expected recovery in industrial activity should support economic growth in 2025-26, RBI Governor Sanjay Malhotra said while announcing his first bi-monthly monetary policy for the current fiscal.

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Among the key drivers on the demand side, household consumption is expected to remain robust aided by the tax relief in the Union Budget 2025-26, he said.

Finance Minister Nirmala Sitharaman in Budget 2025-26 provided the biggest-ever tax break to the middle class to boost consumption after the economy slowed to its lowest pace since the pandemic.

India's GDP growth fell to a 7-quarter low of 5.4% in July-September period of current financial year 2024-25, as against RBI's own projection of 7%.

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