Indian economy continues to demonstrate resilience amidst global volatility: RBI report

NEW DELHI: The Indian economy continues to demonstrate resilience amid volatility in global markets, the RBI said in its monthly report. It pointed to the robust performance of the agriculture sector and improving domestic consumption.

India’s macroeconomic strength is also bolstered by a decline in headline CPI inflation to a seven-month low of 3.6 per cent in February 2025 on account of a further correction in food prices, the central bank affirmed.

Escalating trade tensions and a heightened wave of uncertainty about the scope, timing, and intensity of tariffs are testing the global economy’s resilience. Heightened volatility in global financial markets has also caused apprehensions about the slowdown in global growth, said RBI.

“Amidst these challenges, the Indian economy continues to demonstrate resilience as evident in the robust performance of the agriculture sector and improving consumption,” said the RBI.

The ‘State of the Economy’ chapter of RBI’s monthly report also noted the increasing foreign fund outflows. The RBI noted that the reverberations of a tumultuous external environment are being reflected in sustained foreign portfolio outflows.

Foreign investors have been aggressively withdrawing funds since October, causing the benchmark stock indices–Sensex and Nifty — to fall sharply from their all-time highs. That said, the Indian economy continues to demonstrate resilience in this turbulent global environment, as the growth momentum is supported by robust sectoral performance and improving consumption trends.

The Second Advance Estimates (SAE) released by the National Statistics Office (NSO) project a steady 6.5 per cent growth for 2024-25. The latest quarterly data further underscores this strength, with real GDP expanding by 6.2 per cent in Q3:2024-25, shaking off the sluggishness of the previous quarter.

“Private consumption expenditure is on an upward trajectory, signalling strong consumer confidence and sustained demand. Government spending has picked up significantly in recent months, providing a further fillip to growth,” RBI said.

“Key sectors, including construction, financial services, and trade, continue to thrive as pillars of economic resilience. Various high-frequency indicators of economic activity point towards a sustained momentum in growth during Q4 as well.”

The RBI report added that recent developments across different sectors reaffirm the assessment of a sequential pick-up in growth momentum. (ANI)