Amid persistent trade frictions and heightened policy uncertainty, the Indian economy has exhibited resilience, a Reserve Bank of India’s (RBI) article said.
Domestic growth is driven by robust domestic consumption, increased government spending and strong services sector, it said.
“Indian economy continues to be ring-fenced by stability encompassing monetary, financial and political stability; policy consistency and certainty; congenial business environment; and strong macroeconomic fundamentals along with a policy ecosystem that is transparent, rule-based, and forward-looking,” the ‘State of the Economy’ article published in the RBI’s May bulletin said.
In the midst of global trade realignments and industrial policy shifts, India is increasingly positioned to function as a “connector country” that can become a key intermediary in sectors such as technology, digital services and pharmaceuticals.
The article has been prepared by the central bank’s officials. The RBI said the views published in the article are of the authors and not of the institution.
It further said that the recent completion of free trade agreement with UK points to a strengthening of bilateral trade linkages.
“Going forward, notwithstanding the daunting challenges in the horizon, India stands well-positioned to navigate the ongoing global headwinds with confidence, ready to harness emerging opportunities and consolidate its role as a key driver of global growth,” it said.
The article said a bumper Rabi harvest and higher acreage for summer crops, coupled with favourable southwest monsoon forecasts for 2025, augur well for the agriculture sector.
Headline , as measured by y-o-y changes in the all-India consumer price index (CPI), moderated to 3.2 per cent in April 2025 (the lowest since July 2019) from 3.3 per cent in March.
The decline in headline inflation by approximately 20 basis points (bps) came from a negative base effect of 50 bps which more than offset a positive price momentum of 30 bps.
“Inflation pressure has eased significantly and is poised for a durable alignment with the target in 2025-26,” it said.
Domestic financial market sentiments, which remained on edge in April, witnessed a turnaround since the third week of May, the article said.
