India’s economy remains resilient despite heightened global uncertainties, with high-frequency indicators for May pointing to sustained growth across industrial and services sectors, the Reserve Bank of India (RBI) said on Wednesday in its monthly bulletin.
The report noted broad-based growth in agricultural output for 2024-25, with most major crops seeing an uptick in production. Retail inflation remained subdued, staying below the target for the fourth consecutive month in May.
“Financial conditions remained conducive to efficient transmission of rate cuts,” the bulletin said.
The RBI observed that the global economy is in flux due to trade policy uncertainties and geopolitical tensions. However, India’s provisional GDP estimates for 2024-25 reaffirm growth at 6.5%, with a significant sequential pickup in the fourth quarter.
Among countries surveyed for the Purchasing Managers’ Index (PMI), India posted the highest overall activity and was an outlier for new export orders in May amid contractions elsewhere. Capacity utilisation by manufacturing firms stayed above its long-term average.
High-frequency demand indicators also signalled a pickup in rural demand, driven by strong agricultural output. Consumer confidence remained stable, with optimism about future prospects improving.
Retail inflation stayed benign as food prices eased on the back of record crop production. Core inflation also remained stable, with some softening evident after excluding the impact of volatile gold and silver prices.
Equity markets posted modest gains through May and June despite volatility on global cues, the report added. Markets rebounded on June 20 after a sharp dip driven by geopolitical tensions in the Middle East.
Although credit growth moderated in April — notably in agriculture and services — non-bank sources of credit, including external commercial borrowings, remained robust. Financial conditions were supportive of rate cut transmission to the credit market, the report said.
The RBI also noted that the external sector was resilient, with adequate foreign exchange reserves to cover imports and debt.
IANS