Winning Bizness Desk

Mumbai.The Reserve Bank of India (RBI) has projected that the Indian economy will remain one of the world's fastest-growing major economies, with real GDP growth estimated at 6.9% in 2026-27. In its annual report for 2025-26 released on Friday, the central bank said India's strong economic fundamentals, resilient domestic demand and stable policy environment would help the country withstand growing global uncertainties. While much of the world is expected to face slower growth, the RBI believes India is well-positioned to maintain momentum despite external shocks.

Global risks cloud economic outlook

The RBI warned that geopolitical tensions have emerged as the biggest threat to global economic growth in 2026. The crisis in West Asia, which escalated in February this year, has already altered growth and inflation forecasts across the world.

According to the report, the International Monetary Fund's baseline estimates suggest:

• Global growth may slow to 3.1% in 2026 from an earlier estimate of 3.3%.
• Global trade growth is expected to weaken to 2.8%.
• Further escalation of geopolitical tensions could worsen the global outlook.

The central bank said uncertainty remains elevated and could affect investment, trade flows and financial markets worldwide.

Inflation pressures remain a concern

Apart from slowing growth, rising inflation continues to challenge economies across the globe. Higher energy prices and supply chain disruptions are pushing costs upward in many countries.

The RBI estimates global inflation at 4.4% in 2026, higher than the earlier projection of 3.8%. It cautioned that worsening geopolitical conditions could trigger sharp corrections and volatility in equity markets.

Why India remains better positioned

Despite these global headwinds, the RBI remains optimistic about India's economic prospects. The report identifies several factors that could help sustain growth.

Key strengths highlighted by the RBI include:

• Strong balance sheets of banks and corporate firms.
• Continued government spending on infrastructure and capital projects.
• Adequate food grain stocks across the country.
• Stable agricultural production supporting rural demand.

The central bank said that if the impact of the West Asia crisis remains limited, achieving the projected 6.9% growth rate should be possible, although downside risks still exist.

Food stocks may help contain inflation

The RBI expects consumer price inflation in India to remain broadly within the target range. For FY27, retail inflation based on the Consumer Price Index is projected at 4.6%.

However, risks remain from rising crude oil prices, commodity shocks and currency fluctuations. The report noted that India's comfortable food stocks and stable farm output could act as a buffer against inflationary pressures.

Monsoon, jobs and exports to shape growth

The report said agricultural performance will largely depend on the monsoon. While El Niño conditions could affect rainfall, support from the Indian Ocean Dipole later in the year may reduce the risk.

The RBI also expects new labour codes to improve employment conditions, increase consumer spending and boost productivity. On the external front, strong services exports, remittances and new trade agreements are expected to keep India's current account position stable. The banking system, meanwhile, remains well-capitalised and capable of handling financial stress, though short-term risks from global volatility continue to persist.