Consumer sentiment, according to forward-looking surveys, also remained upbeat. While current-period confidence held steady, optimism about the near-term future showed improvement, reinforcing the narrative of resilient domestic demand
India’s economy remains resilient in the face of rising global uncertainties, according to the Reserve Bank of India’s (RBI) June 2025 monthly economic bulletin. The report highlights strong performance across industrial, services, and agricultural sectors, with multiple indicators pointing toward sustained domestic growth and stability despite global headwinds.
The bulletin emphasizes that high-frequency indicators for May 2025 reflect robust activity, particularly in the manufacturing and services sectors. This strength comes against the backdrop of ongoing global disruptions caused by trade policy uncertainties and heightened geopolitical tensions.
On the domestic front, the RBI reaffirmed its growth projection of 6.5% for the fiscal year 2024–25, with a notable sequential pick-up in the fourth quarter. Capacity utilization among manufacturing firms remained above the long-term average, reflecting continued momentum in production activity.
India’s performance in the global Purchasing Managers’ Index (PMI) rankings stood out, with the country recording the highest overall expansion in economic activity among major economies. The rise in new export orders in May was also a significant outlier, especially as other large economies reported contraction.
The agricultural sector, too, offered encouraging signs. The 2024–25 crop year saw broad-based increases across most major crops, contributing to a surge in rural demand. This agricultural rebound is also credited with helping ease food inflation, as record crop output translated into lower food prices.
Headline inflation remained below the RBI’s target for the fourth consecutive month in May. The report highlights a steady trend in core inflation, with softening pressures once the impact of volatile gold and silver prices is excluded. “The domestic price situation remains benign,” the report said, adding that underlying inflationary pressures are muted.
Consumer sentiment, according to forward-looking surveys, also remained upbeat. While current-period confidence held steady, optimism about the near-term future showed improvement, reinforcing the narrative of resilient domestic demand.
In financial markets, Indian equities posted modest gains during the May–June period, recovering swiftly from a brief, sharp correction triggered by geopolitical tensions in the Middle East. Markets rebounded strongly on June 20, buoyed by supportive domestic cues and positive global signals.
While credit growth showed some deceleration in April — especially in the agriculture and services sectors — the RBI noted that non-bank credit sources remained robust. Inflows through external commercial borrowings (ECBs), although slightly lower than March levels, continued to be healthy. This ensured that financial conditions remained conducive to supporting credit transmission following recent rate cuts.
The bulletin further underscored the strength of India’s external sector. Forex reserves remained at comfortable levels, offering ample coverage for both imports and external debt obligations.
Despite global turbulence, India’s economic fundamentals appear strong. The RBI bulletin concludes that the Indian economy is well-positioned to navigate current uncertainties, backed by resilient domestic demand, moderate inflation, healthy crop output, and supportive financial conditions. As global economies grapple with volatility, India’s steady hand offers a measure of reassurance and stability.
