New Delhi: The Indian economy is set to maintain its position as the world's fastest-growing major economy, with robust projections from both the International Monetary Fund (IMF) and the Reserve Bank of India (RBI). This positive outlook is underpinned by strong domestic demand, strategic investments, and a resilient policy framework, even amidst global uncertainties.
IMF Projects 6.6% Growth for India in 2025-26
In its latest World Economic Outlook (WEO) report, released on October 25, 2025, the International Monetary Fund (IMF) projected India's economy to expand by an impressive 6.6% in 2025-26. This forecast positions India ahead of China, which is expected to grow by 4.8%, solidifying India's status as a global growth leader. The upward revision in the IMF's forecast is largely attributed to India's stronger-than-expected economic performance in the first quarter of the fiscal year and the sustained resilience of its domestic demand. While acknowledging the impact of rising US tariffs on Indian goods, the IMF noted that strong economic performance has significantly countered these effects. However, the IMF has slightly reduced its 2026 forecast for India to 6.2%, citing a potential moderation in the first-quarter momentum. Globally, the IMF projects a growth rate of 3.2% in 2025, with challenges such as prolonged uncertainty and protectionism persisting.
RBI Maintains Stable Monetary Policy, Upgrades Growth Forecast
The Reserve Bank of India (RBI) continues to adopt a balanced approach, keeping the repo rate unchanged at 5.50% with a neutral stance, as announced in its Monetary Policy Report following the 57th Monetary Policy Committee meeting in early October 2025. The RBI has revised India's GDP growth forecast for FY 2025-26 upwards to 6.8% from an earlier estimate of 6.5%. Concurrently, the central bank has lowered its Consumer Price Index (CPI) inflation forecast for the same period to 2.6% from 3.1%. This optimistic outlook is driven by resilient domestic demand, supportive financial conditions, and a stable external sector. The RBI emphasized that strong consumption, investments, government spending, favorable monsoons, and structural reforms are key drivers sustaining the positive economic trajectory.
Reliance and Meta Announce Major AI Investment
In a significant development for India's technology sector, Reliance Industries and Meta Platforms are set to make a joint investment of Rs 855 crore in Artificial Intelligence (AI) services in India. This collaboration will operate through a newly established entity, Reliance Enterprise Intelligence Ltd (REIL), with Reliance holding a 70% stake and Meta owning the remaining 30%. This strategic investment targets India's AI market, which is projected to reach an impressive $20-22 billion by 2027, highlighting the growing importance of AI in the country's economic landscape.
Indian Consumer Spending Witnesses Strong Comeback
Evidence points to a robust revival in Indian consumer spending, signaling a significant boost to the domestic economy. Media reports indicate that Navratri sales have reached a decade-high, while bookings for small cars from India's largest automaker have surged by 50% during the same festive period. The consumer durables sector has seen over 20% growth, and initial festive sales in e-commerce and quick-commerce channels remain strong. This resurgence is attributed to various factors, including income tax cuts, lower interest rates, state welfare schemes boosting disposable incomes, and a recent GST rate cut.
Indian Refiners Adapt to US Sanctions on Russian Crude
Indian refiners, including Reliance Industries, are actively adjusting their operations to ensure compliance with new US sanctions imposed on Russian crude exporters Rosneft and Lukoil. While state-run firms are absorbing the initial costs of securing alternative supplies at market rates, the immediate impact on consumers is expected to be minimal. This strategic shift signifies the refiners' preparations for a future with potentially reduced reliance on Russian oil.
Business Travel Sector Experiences Boom
India's business travel landscape is flourishing in 2025, with key global destinations such as the United States, the United Arab Emirates, and Germany experiencing a surge in Indian corporate travelers. A survey by SAP Concur's 2025 Global Business Travel indicates that a significant majority of business travelers (89%), travel managers (93%), and CFOs (90%) anticipate their travel budgets to either remain steady or increase this year, reflecting growing corporate confidence and international expansion efforts.