India holds bright prospects: RBI Governor projects 6.5% GDP growth, counters Trump’s jibe

Mangalore Today News Network

New Delhi, Aug 6, 2025: India’s economy holds bright prospects in the changing world order, Reserve Bank of India Governor Sanjay Malhotra said on Wednesday, as he announced the third bi-monthly monetary policy of the current fiscal.

Despite the uncertain global trade environment due to ongoing tariff announcements and trade negotiations, the RBI also kept the GDP growth projection for the current financial year 2025-26 unchanged at 6.5 per cent.

“The Indian economy holds bright prospects in the changing world order, drawing on its inherent strengths," the RBI Governor said.

“Prospects of external demand, however, remain uncertain amidst ongoing tariff announcements and trade negotiations. Taking all these factors into account, real GDP growth for 2025-26, the current year, is projected at 6.5 per cent, our earlier projection," he added.

Breaking down the quarterly projections, the RBI forecast real GDP growth for Q1 of FY26 at 6.5 per cent, Q2 at 6.7 per cent, Q3 at 6.6 per cent, and Q4 at 6.3 per cent.

For the first quarter of the next financial year 2026-27, growth is projected at 6.6 per cent. The central bank said that the risks to the growth outlook are evenly balanced.

The RBI Governor’s statement comes days after US President Donald Trump’s remark terming India a “dead economy", as he announced a 25 per cent tariff on the import of Indian goods along with an unspecified “penalty" for buying the “vast majority" of Russian military equipment and crude oil.

The RBI expects the domestic economy to be driven by an above-normal southwest monsoon, lower inflation, rising capacity utilisation, and congenial financial conditions.

These factors, the RBI noted, are providing a supportive backdrop for sustained economic activity.

Further, the central bank highlighted that supportive monetary, regulatory, and fiscal policies, including robust government capital expenditure, are likely to boost demand further.

It also pointed out that the services sector is expected to remain buoyant, backed by sustained growth in construction and trade segments.

“With sustained growth in construction and trade segments, the services sector is expected to remain buoyant in the coming months," the RBI Governor mentioned.

Last week, an S&P Market Intelligence report stated that if 25 per cent tariff imposed by the United States will remain in place beyond September 2025, India’s GDP will be adjusted downwards, as it projected India’s GDP for FY 2025-26 at 6.2 per cent in July, down from a GDP growth of 6.5 per cent in FY 2024-25.

The report noted that India is never going to offer market access for the US in the agriculture and dairy products sectors, as it will directly impact the farmers who represent a crucial electoral group in the country.