India’s Economic Outlook Brightens as RBI Acts, Global Agencies Raise Growth Forecasts
India’s macroeconomic outlook received a boost this week as the Reserve Bank of India (RBI) stepped up policy support and global rating agencies revised GDP forecasts upward. These changes are being driven by a strong domestic demand, monetary easing, and a normal monsoon outlook.
RBI Takes Decisive Steps to Spur Growth
On June 6, the RBI reduced the benchmark policy rate by 50 basis points. This larger-than-expected cut is aimed at accelerating credit growth and reviving private investment. The central bank also urged commercial banks to pass on the rate cuts to borrowers, especially in the MSME and housing segments.
To further align overnight liquidity conditions, the RBI has scheduled a ₹1 trillion reverse repo auction on June 27. This is intended to steer short-term interest rates closer to the new policy corridor.
“The transmission of the rate cut is critical at this stage to ensure financial conditions remain accommodative,” said RBI Governor Shaktikanta Das during the post-policy briefing. “We believe these measures will support sustained recovery across sectors.”
Growth Indicators Show Resilience
The RBI’s June 2025 bulletin presents an optimistic picture of India’s economic health. The report highlights that all three major sectors — industry, services, and agriculture — showed expansion in May. Retail inflation also eased to 2.82 percent, marking the lowest level in over six years.
“The Indian economy continues to show resilience amidst global uncertainties,” the bulletin states. “Moderating inflation, robust services growth, and early signs of capex revival are encouraging.”
S&P, ICRA Revise India’s GDP Forecasts
S&P Global Ratings has revised India’s FY26 GDP growth forecast to 6.5 percent, up from 6.3 percent. The revision is based on strong consumption demand, stable policy signals, a normal monsoon outlook, and the lagged effect of rate cuts, according to S&P’s lead economist for Asia-Pacific, Vishrut Rana.
Domestic ratings agency ICRA has maintained its 6.2 percent growth projection for the year but has flagged potential risks from global supply chain disruptions and oil price volatility. “While we see broad-based domestic momentum, external factors like geopolitical tensions and El Niño-linked weather risks need to be monitored,” said ICRA Chief Economist Aditi Nayar.
Outlook: Cautious Optimism with Tailwinds
With policy support in place, inflation under control, and growth drivers gaining momentum, India appears well-positioned to navigate global uncertainty in 2025. The combination of monetary easing, a good monsoon forecast, and revived investment activity suggests that India may continue to be one of the fastest-growing major economies.
However, experts urge continued vigilance.
“Sustaining growth will require close coordination between fiscal and monetary authorities, and timely execution of infrastructure and social sector spending,” said Dr. Pronab Sen, former Chief Statistician of India.
India’s financial outlook, as of now, is stable and upward. It is supported by decisive action from the RBI and growing confidence from both domestic and international stakeholders.
(The writer is a seasoned Banker and Mortgage Specialist working for India’s largest loan distributor company and occasional political commentator.)
