Bank of Baroda projects a 6.8% real GDP growth for India in FY 2025-26, driven by robust domestic demand, strong high-frequency indicators, and stable agricultural output. Nominal GDP is expected to grow by 10.5%. However, global headwinds and protectionist trade policies may pose risks.

BulletsIn

• Indian economy expected to grow by 6.8% in FY 2025-26, with nominal GDP growth at 10.5%.
• Growth driven by strong high-frequency indicators like air passenger traffic, services PMI, and GST collections.
• Higher rabi crop sowing projected to boost agricultural output, strengthening economic foundations.
• Festive demand and steady improvement in economic activity have shown resilience in the economy.
• Investment and consumption remain critical to sustaining growth momentum in upcoming quarters.
• Risks include global headwinds, particularly potential tariff wars under the incoming US administration.
• Report highlights the Union Budget, Q3 and Q4 corporate performance, and RBI’s monetary policy as key domestic focus areas.
• RBI expected to announce a rate cut in February 2025 to further support growth.
• While global uncertainties persist, India’s domestic strengths are poised to sustain steady economic growth.