RBI Forecasts India as the Fastest-Growing Economy Amid Strengthened Financial Flows

The Reserve Bank of India released its January 2026 Bulletin, presenting a comprehensive overview of the economy and financial trends. Global growth in 2025 remained resilient despite elevated uncertainties, which moderated in December. 

India’s first advance estimates for GDP growth in 2025-26 reflected strong domestic drivers, supporting economic stability amid global challenges. 

High-frequency indicators for December suggested continued momentum in growth, with demand conditions remaining robust. Inflation, measured by headline CPI, edged up slightly in December but stayed below the lower tolerance threshold, supporting macroeconomic stability.

Credit flow to the commercial sector showed improvement, aided by both bank and non-bank sources, indicating that financial resources were increasingly available to support investment and economic activity. Overall, domestic economic fundamentals remained strong, helping India navigate global volatility effectively.

Financial Stocks and Flow of Funds of the Indian Economy 2023-24

The Bulletin also included an analytical article on the financial stocks and flows (FSF) of the Indian economy for 2023-24, authored by Suraj S, Ishu Thakur, and Mousumi Priyadarshini. The FSF framework tracks the movement of funds from one sector to another, providing insights into inter-sectoral linkages and macroeconomic trends.

In 2023-24, financial assets of domestic sectors grew by 13.9%, up from 9.9% in 2022-23, while financial liabilities increased by 12.7%, higher than 10.4% in the previous year. The financial resource deficit of the domestic economy narrowed to 0.9% of GDP from 2.3% in 2022-23. 

Households and financial corporations remained surplus sectors, financing deficits of the general government and non-financial corporations. Net financial wealth rose to 28.6% of GDP from 24.8% in 2022-23, reflecting stronger balance sheets across sectors.

Despite global uncertainties, India’s external financial assets and liabilities expanded in 2023-24, highlighting the growing openness of the economy. 

Currency, deposits, loans, and debt securities accounted for nearly two-thirds of the total financial assets and liabilities by end-March 2024, emphasising traditional channels of financial intermediation.

Also Read: RBI Cancels Registration of 35 NBFCs!

Conclusion

The January 2026 RBI Bulletin demonstrates India’s resilient growth, improved credit flows, and strengthened financial sector balance sheets, reflecting robust domestic fundamentals amid global uncertainties.

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