MUMBAI: India's economic growth outlook remains upbeat, with recent estimates suggesting the country will continue to be the world's fastest-growing major economy, according to an article in the Reserve Bank of India's January bulletin

"Even amidst these global uncertainties, the current state of the economy provides ground for optimism going forward," RBI executives wrote in the monthly article titled State of the Economy, released on Wednesday.

The article noted that 2026 began with an escalation of geopolitical tensions, including US intervention in Venezuela, the simmering conflict in West Asia, uncertainty around a Russia-Ukraine peace deal, and a renewed row over Greenland. Together, these developments point to elevated geo-economic risks and persistent policy uncertainty.

Despite the global headwinds, India is engaged in trade negotiations with 14 countries or blocs, representing nearly 50 nations, including the European Union, Gulf Cooperation Council countries and the US. In December, India concluded trade negotiations with New Zealand and Oman, the article noted.

While authored by RBI officials, the article carried the standard disclaimer that the views expressed are those of the authors and not of the central bank.

"The year 2025 also witnessed major economic reforms, including the rationalisation of tax structures, implementation of labour codes for labour market reforms, and financial sector deregulation, all of which are expected to strengthen the growth prospects," it said.

The article added that the first advance estimates of GDP for FY26 underscored the resilience of the Indian economy, driven by domestic demand amid a challenging external environment. The economy is projected to grow 7.4% in the current financial year, supported by strong manufacturing and services activity, healthy household consumption, and robust fixed-asset investment. This follows a growth of 6.5% in FY25 and 9.2% in FY24.

"High frequency indicators for December suggest continued buoyancy in growth impulses with demand conditions remaining upbeat," it said.

Economic activity remained strong in December, the article noted. E-way bill generation posted healthy growth, aided by GST rate rationalization, stock clearance and firms' efforts to meet year-end sales targets. Growth in goods and services tax (GST) collections was driven primarily by higher import-related receipts.

Petroleum consumption also picked up amid elevated travel and logistics activity, while electricity demand recovered as winter-related consumption gained traction. Digital payments continued to record robust growth in both value and volume.

"Indicators of rural demand regained momentum with retail automobile sales recording broad-based growth across categories," it said. "An increase in automobile sales was driven by enhanced affordability following GST rate cuts, year-end promotional offers, and increased demand ahead of expected price revisions in January. Retail sales of two-wheelers and tractors posted strong growth supported by increase in minimum support prices for rabi crops and GST rationalization.