RBI: Shadow of global recession, yet India’s growth rate is the fastest
New Delhi: According to the Reserve Bank of India (RBI), despite global uncertainty, India remains one of the fastest-growing major economies in the world. Economic activity maintained its momentum through June, with indicators for India’s industrial and services sectors remaining robust.
While the impact of the southwest monsoon on the agricultural sector has been uneven, healthy grain stocks could help mitigate the impact on food inflation.
According to the central bank’s July bulletin, “External trade momentum remained strong, evidenced by the significant rise in exports and imports during the first quarter of 2026-27. This is expected to gain further impetus from the recent implementation of the India-UK Comprehensive Economic and Trade Agreement and progress on other bilateral trade agreements.”
External risk indicators also remained favorable. A recovery in foreign investment in recent months signals a return of confidence in the economy.
The global economy is grappling with an uncertain economic environment, supply chain disruptions, and fragmented trade relations.
However, the domestic economy has withstood external uncertainties well, driven by robust demand and strong performance in the industrial and services sectors.
The RBI bulletin noted, “Headline retail inflation edged up in June, while core inflation (particularly excluding precious metals) remained subdued. Liquidity conditions improved further, sustaining credit growth. Inflows of foreign investment have kept India’s external sector stable, with the outlook continuing to improve.”
Gross and net Foreign Direct Investment (FDI) in April-May 2026 were higher compared to the previous year. Amidst policy support and an easing of geopolitical tensions, net Foreign Portfolio Investment (FPI) flows turned positive in June and remained so in July. The RBI stated, “Indian equity markets saw gains in June. However, equity markets remained range-bound after the ceasefire ended in early July.” Additionally, the RBI noted that key risk indicators for India’s external sector remained stable through the end of March 2026.
