Bank of Baroda's Economic Growth Forecast for India in FY2025-26

Bank of Baroda’s Economic Outlook

Bank of Baroda anticipates 6.8% GDP growth for FY2025-26, citing robust high-frequency indicators such as increased air passenger traffic, higher services Purchasing Managers’ Index (PMI), and strong Goods and Services Tax (GST) collections. Improved rabi crop sowing is also expected to strengthen agricultural output, further bolstering the economy.

United Nations’ Perspective

The UN’s "World Economic Situation and Prospects 2025" report forecasts India’s GDP growth at 6.6% for FY2025-26, emphasizing the role of private consumption and investment. The report also highlights South Asia’s projected growth of 5.7% in 2025 and 6% in 2026, largely driven by India’s performance.

Comparing Forecasts

While Bank of Baroda’s projection of 6.8% is slightly higher than the UN’s 6.6%, both underscore India’s robust economic fundamentals. The National Statistics Office (NSO), however, provides a more conservative estimate of 6.4% growth for FY2024-25, reflecting cautious optimism.

Growth Drivers

• Private Consumption and Investment: Both reports highlight these as key factors sustaining economic momentum.
• Agriculture: Enhanced rabi crop sowing is expected to boost agricultural output.
• High-Frequency Indicators: Increased air passenger traffic, rising services PMI, and GST collections reflect strong economic activity.

Risks to Growth

Despite the positive outlook, challenges such as global economic uncertainties, rising oil prices, and protectionist trade policies could pose risks to growth projections.

India’s resilient economy, supported by domestic consumption and investment, remains a key driver of regional and global growth.