Indicators point to fiscal resilience despite global tensions, says RBI

Key economic indicators point towards resilient economic activity in India across industrial and services sectors amid twin shocks of global trade policy uncertainties and heightened geopolitical tensions, the Reserve Bank’s Bulletin said on Wednesday.

An article published in the RBI’s June Bulletin said the global economy is in a state of flux. “In this state of elevated global uncertainty, various high-frequency indicators for May 2025 point towards resilient economic activity in India across the industrial and services sectors,” it said.

Agriculture showed a broad-based increase in production across most major crops during 2024-25.

Also, the domestic prices situation remains benign, with headline inflation staying below the target for the fourth consecutive month in May.

Financial conditions remained conducive to facilitating an efficient transmission of rate cuts to the credit market, the article on ‘State of the Economy’ said.

“In this state of elevated global uncertainty, various high-frequency indicators for May 2025 point towards resilient economic activity in India across the industrial and services sectors,” the bulletin said.

According to the article, gross inward foreign direct investment (FDI) amounted to USD 8.8 billion in April 2025, higher than USD 5.9 billion in March 2025 and USD 7.2 billion in April 2024.

Manufacturing and business services accounted for nearly half of the gross FDI inflows in April 2025.

The net outward FDI also increased, along with a moderation in repatriation.

The net FDI inflows more than doubled year-on-year to USD 3.9 billion in April 2025, it said.

High-frequency food price data for June so far (up to June 20, 2025) shows moderation in rates of pulses, while prices of cereals have risen marginally, it added.

Edible oil prices, on the other hand, have firmed up, driven by soybean, sunflower, and mustard oil, while palm and groundnut oil prices moderated. Among the key vegetables, onion prices have recorded further correction, while that of potato and tomato prices increased, it said.

The article said that protracted trade policy uncertainties and rising trade barriers pose the risk of significantly scarring the global economy.