Strong agriculture output, low inflation, and robust industrial activity highlight India’s steady growth amid global uncertainty
India’s Economic Momentum Remains Steady Despite Global Turbulence: RBI Bulletin
New Delhi | June 25, 2025 – India’s economy continues to show resilience and steady momentum despite rising global uncertainties in trade and geopolitics, according to the Reserve Bank of India’s (RBI) monthly economic bulletin released on Wednesday.
The central bank’s report for May 2025 points to positive signals across the agriculture, industry, and services sectors, even as global growth remains under pressure.
Key Highlights from RBI’s May 2025 Bulletin
1. GDP Growth on Track
- India’s GDP is projected to grow at 6.5% in FY 2024–25, as per provisional estimates.
- A strong pickup in Q4 of the fiscal year contributed to the overall momentum.
2. Record Agricultural Output
- Agriculture posted a broad-based rise in production across major crops during 2024–25.
- This bumper harvest is helping reduce food inflation, benefiting both consumers and rural incomes.
3. Industrial and Services Sector Growth
- High-frequency indicators show sustained activity in both sectors.
- India led globally in Purchasing Managers' Index (PMI) growth, especially in new export orders—a rare positive in a slowing global trade environment.
- Capacity utilization in manufacturing stayed above the long-term average.
4. Inflation Under Control
- Headline inflation remained below the RBI’s 4% target for the fourth consecutive month in May.
- Core inflation—excluding gold and silver—also showed signs of softening.
- The strong agri output has led to a sharp drop in food prices, which played a big role in cooling inflation.
5. Financial and Credit Conditions Remain Favorable
- Though credit growth slowed in April, particularly in agriculture and services, non-bank funding sources like External Commercial Borrowings (ECBs) remained steady.
- Financial conditions were favorable for transmitting earlier rate cuts to borrowers, easing loan burdens.
Stock Market Trends and External Stability
- Indian equity markets posted modest gains in May–June, despite intermittent volatility due to global cues.
- A brief dip in mid-June—triggered by rising tensions in the Middle East—was quickly reversed by a strong rebound on June 20.
- India’s external sector remains robust, with ample foreign exchange reserves to cover imports and external debt.
Consumer Confidence Holding Steady
- Forward-looking consumer sentiment surveys indicate stable confidence for the present and greater optimism for the future.
- A noticeable uptick in rural demand—backed by the strong agricultural sector—is also reflected in May’s data.
Why This Matters
The RBI bulletin paints a positive outlook for India at a time when many global economies are grappling with uncertainty in trade policies, inflation, and geopolitical tensions.
India’s ability to:
- Control inflation,
- Boost output in agriculture,
- Sustain industrial activity, and
- Maintain external stability,
…positions it as a bright spot in the global economic landscape.
Key Takeaways at a Glance:
| Sector | Status |
|---|---|
| GDP | 6.5% growth projected for FY 2024–25 |
| Agriculture | Record crop output in 2024–25 |
| Inflation | Below RBI target for 4th straight month |
| Industrial Activity | Strong PMI, positive export orders |
| Credit | Slow growth in April; non-bank inflows steady |
| Financial Conditions | Conducive for loan rate cuts |
| Equity Market | Volatile but stable rebound |
| External Sector | Forex reserves adequate |