Despite the uncertainties in the global economy, marked by tariff wars and increasing geopolitical tensions, the Reserve Bank on Wednesday said the country’s economy portrays a picture of strength, stability, and opportunity.
The provisional estimates released by the National Statistical Office (NSO) said the real GDP grew 6.5% in fiscal 2024-25, boosted by an unexpected 7.4% growth in the final quarter. In his foreword to the June issue of the monthly bulletin, governor Sanjay Malhotra said, “In this global milieu, our economy presents a picture of strength, stability, and opportunity.” The global economy is in a state of flux, reeling from the twin shocks of trade policy uncertainties and a spike in geo-political tensions, the June bulletin said.
“In this state of elevated global uncertainty, various high-frequency indicators for May point towards resilient economic activity in India across the industrial and services sectors,” the bulletin adds, which though are not the official views of the monetary authority. The economy registered the highest growth among the world’s major economies, with the latest estimates for Q4 at 7.4% indicating a sharp pick-up in momentum, it added.
Meanwhile, the optimism from a temporary tariff freeze and trade deals kept financial market sentiments buoyed in May and early-June 2025, the article said. However, following the outbreak of the Iran-Israel conflict, heightened uncertainty and volatility have once again gripped financial markets, it stated.
The economic activity has exhibited resilience, characterised by a strong agricultural sector, comfortable food crop supply, and healthy reservoir levels. Industrial activity too is improving, though unevenly, while the services sector continues to grow steadily as evident from a strong services PMI of 58.8 in May, the RBI economists said in the monthly bulletin for June, released Wednesday. “Record domestic crop production in 2024-25 agricultural season is translating into a sharp and sustained easing of food price inflation. Steady core excluding food and fuel inflation, with indications of some softening after excluding the impact of volatile and elevated gold and silver prices, indicates that underlying inflationary pressures remain muted.”
Domestic inflation remains benign with headline inflation remaining below the target for the fourth consecutive month in May, supported by record domestic crop production in 2024–25, which has eased food price pressures, it said. While in April headline CPI fell to 3.8%, the May readings printed in at 2.82%-- a 75-month low. On the demand side, the bulletin says private consumption remains healthy with rising discretionary spending. While rural demand is steady, urban demand is picking up, it adds.
Investment activity is reviving, as seen in high-frequency indicators. Healthy corporate and bank balance sheets, government capex, and improved business sentiment are expected to further drive investments, the authors said in the state of the economy article.