RBI: India's Economy Navigated Tumultuous Global Phase, Credit Growth Robust

MUMBAI: Liquidity conditions have improved further, supporting robust credit growth even as India’s external sector remains steady with an improving outlook aided by foreign investment inflows, RBI said in its latest State of the Economy report, noting that the domestic economy has navigated a “tumultuous phase” in global markets marked by fragile geopolitics and supply chain pressures. The central bank said that the global economy is continuing with the heightened uncertainties, but added that on the domestic front India has “navigated the external uncertainties well, underpinned by healthy demand conditions and resilient performance of the industrial and services sector”. On the agriculture front, RBI flagged that there has been delayed kharif sowing due to the uneven progress in southwest monsoon amid prevailing El Niño conditions, while noting that high public foodgrain stocks should provide some cushion against price pressures. The report added that “India’s key external sector vulnerability indicators remained well-anchored as at end-March 2026” with comfortable forex reserves, and the outlook is expected to be strengthened by the operationalisation of the India-UK Comprehensive Economic and Trade Agreement and progress in other bilateral trade agreements. RBI said demand conditions remained healthy, supported by a pickup in rural demand and firm urban demand. Rural recovery was reflected in tractor sales accelerating with the commencement of kharif sowing, while two-wheeler sales recorded robust growth. Urban demand was sustained by passenger vehicle sales. High-frequency indicators such as GST e-way bills and digital payments, which recorded value growth of more than 20% for the first time in the last 19 months, pointed to strong economic activity, RBI said. The central bank said “the domestic economy continued to remain buoyant” and that “India remains among the fastest growing major economies across the globe”, with high-frequency indicators up to June pointing to robust industrial performance and a resilient services sector. However, retail inflation edged up, with “headline consumer price index (CPI) inflation edged up in June driven by food and fuel components” to an 18-month high of 4.4%.