India’s central bank is betting on a soft landing at a time when the world economy is heading into fresh turbulence. On Wednesday, the Reserve Bank of India lowered both its inflation and growth projections for 2025–26 by 20 basis points, but signalled an intent to support activity by cutting the policy rate to 6.00% and switching its stance to accommodative. While this policy tilt is welcome, the central bank’s assumption of 6.5% GDP growth looks misplaced given the evolving global landscape.The Monetary Policy Committee cited “new headwinds” from the sharp escalation in global trade tensions following the United States’ unilateral tariff hikes. Yet its baseline GDP growth forecast implies that India will shrug off these external shocks with remarkable ease. With the global economy under strain, India’s export-facing sectors will almost certainly take a hit, as will the pace of capital formation. Even with some domestic tailwinds — including rural demand, stable balance sheets, and signs of consumption recovery — sustaining 6.5% growth will be an uphill task.
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