FY26 GDP Growth Pegged At 6.7%

Mumbai: Reserve Bank on Friday projected the growth rate for the upcoming financial year at 6.7 per cent, up from 6.4 per cent 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. 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 per cent in July-September period of current financial year 2024-25, as against RBI’s own projection of 7 per cent.

The gross domestic product (GDP) rate of 6.4 per cent will be the lowest since the Covid year (2020-21), when the country witnessed a negative growth of 5.8 per cent. It was 9.7 per cent in 2021-22; 7 per cent in 2022-23; and 8.2 per cent in the last fiscal ended March 2024. Presenting her eighth straight budget, Sitharaman on February 1, announced an increase in the personal income tax threshold below which taxpayers owe no tax to Rs12 lakh, up from Rs7 lakh, as well as a rejig in tax brackets that would help those earning higher than that save up to Rs1.1 lakh.