India's economy has shown significant strength even as world growth has been strained by ongoing trade tensions, uncertain policies, and muted consumer sentiment, the Reserve Bank of India (RBI) said in its latest report.
The central bank said that while a temporary truce on tariffs brought some relief in the face of continued challenges, the general outlook for the global economy continues to be weak.
Developing economies and emerging markets—particularly in Asia—are likely to experience considerable headwinds with slower growth fueled by trade tensions, poor consumer sentiment, and policy uncertainty. Volatility in the financial markets has also become a key risk in influencing global economic projections.
In contrast to this tempestuous environment, India is progressing steadily. Industrial and services sector high-frequency data in April indicate that both sectors have continued with their momentum.
Despite these challenges, the Indian economy showed resilience. Some high frequency indicators of industrial and services sectors maintained their momentum during April," said the RBI report, as reported by ANI.
India's strengths have been reflected in the report due to monetary, financial, and political stability; predictable and stable policies; a good business climate; and robust macroeconomic fundamentals.
One of the major flashes of inspiration was the historic goods and services tax (GST) collections in April, which indicate robust economic activity.
Agriculture too is set to support growth, with a bumper crop of rabi, higher sowing of summer crops, and a good-looking southwest monsoon for 2025 forecast. A boost is expected in rural incomes and food production.
Inflation trends are also in the right direction, with headline consumer price index (CPI) inflation falling for the sixth straight month in April to its lowest level since July 2019, led primarily by softening food prices.
The report did see some stress in local financial markets in April, although conditions were better during the second half of May, indicating indications of a revival.
The auto industry had a mixed tale to tell: wholesale vehicle sales dropped 13.3% year-on-year in April, led primarily by a high base effect, especially in two-wheelers. Tractor sales, however, were robust, even as growth softened. Vehicle registration grew 2.9% year-on-year, with transport segment posting its highest growth in six months.
In all, the RBI found that though economic uncertainty has slowed down development even for more mature economies, India remains a chosen, stable destination for long-term investment.
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