The Indian economy continues to exhibit resilience amid an uncertain external environment, and remains poised to register high growth, The RBI’s October Bulletin said.
Indicators of capacity utilisation and domestic demand signalled improvement. Lead indicators of manufacturing and services continued to show a robust expansion. Inflation remained benign, well below the target rate, the Bulletin said.
Global uncertainty has edged up. In the US, both trade and economic policy uncertainty increased in September. Global growth, however, has broadly held up. Investor sentiments dampened in October, on renewed US-China trade tensions and prolonged US government shutdown, after a phase of buoyancy.
“The Indian economy displayed resilience amidst broader global uncertainty and weak external demand. High-frequency indicators point to a revival in urban demand and robust rural demand. Headline consumer price index (CPI) inflation moderated sharply in September, marking its lowest reading since June 2017,” according to the RBI Bulletin.
The IMF revised upwards India’s GDP growth projections for 2025 by 20 bps to 6.6 per cent. India’s growth projection for 2026 was, however, revised downwards, reflecting the medium-term impact of the steep US import tariffs.
The OECD also revised upwards India’s GDP growth projections for 2025 by 40 bps to 6.7 per cent from the earlier 6.3 per cent underscoring the continued momentum in domestic demand.
“Despite an external environment that has deteriorated since the August policy, the Indian economy remains poised to register high growth. The sobering of inflation has given greater leeway for monetary policy to support growth without compromising on the primary mandate of price stability,” said RBI Governor Sanjay Malhotra.
As India strives towards achieving Viksit Bharat by the centenary year of its independence, it would need the coordinated support of fiscal, monetary, regulatory and other public policies to attain its goal, he added.
“The recent rationalisation of GST rates by the government is a major step in this direction In terms of monetary policy actions, we will remain vigilant of the incoming data and stay focussed on our objective of maintaining price stability while supporting growth. In pursuit of this objective, we will be proactive, objective and consistent in our communication while backing it up with credible actions,” the Governor added.
