Reserve Bank of India Governor Sanjay Malhotra described India’s latest GDP growth figure as “surprising,” noting it exceeded the RBI’s July–September forecast of 7%. He emphasized the need to improve forecasting models. Malhotra also highlighted that the upcoming US trade deal could add up to 0.5 percentage points to GDP growth.
RBI Reassesses Forecasts Amid Strong Growth
India’s economy grew at a faster-than-expected pace in the July–September quarter, with headline GDP expanding 8.2% year-on-year, surpassing the RBI’s earlier projection of 7%. Speaking to the Financial Times, RBI Governor Sanjay Malhotra admitted the figure was “surprising” and stressed the need to refine forecasting methodologies to better capture evolving economic dynamics.
Malhotra also pointed to external factors shaping India’s growth outlook. He noted that the US–India trade deal currently under negotiation could provide a significant uplift, potentially adding about 0.5 percentage points to GDP growth. This comes as India navigates global trade pressures, including tariffs and supply chain realignments.
The RBI recently cut the repo rate by 25 basis points, signaling a supportive monetary stance amid moderating inflation. Analysts believe the combination of resilient domestic demand, accommodative policy, and potential trade gains could sustain India’s growth momentum into 2026.
Key Highlights
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GDP Growth: India’s Q2 FY25 GDP rose 8.2% YoY, beating RBI’s 7% forecast.
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Governor’s View: Malhotra called the figure “surprising” and urged better forecasting.
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Trade Deal Impact: US–India trade pact could add 0.5 percentage points to GDP growth.
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Policy Stance: RBI cut repo rate by 25 bps; interest rates expected to stay low.
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Strategic Context: Strong domestic demand and external trade opportunities underpin resilience.
Sources: Financial Times, Economic Times, Business Standard