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News18
a day ago
- Business
- News18
Indian Economy Stays Resilient Despite Global Woes, FY26 Growth Likely At 6.2-6.5%: Finance Ministry
India's economic activity in Q1 FY26 was underpinned by strong domestic demand, robust services growth, and encouraging signs from manufacturing and agri, says finance ministry. India's economy continues to show signs of resilience despite global headwinds, supported by robust domestic demand, healthy monsoons, and fiscal prudence, according to the finance ministry's latest report. 'The Indian economy in mid-2025 presents a picture of cautious optimism. Despite global headwinds marked by trade tensions, geopolitical volatility, and external uncertainties, India's macroeconomic fundamentals have remained resilient. Aided by robust domestic demand, fiscal prudence and monetary support, India appears poised to continue as one of the fastest-growing major economies, with various forecasters, including S&P, ICRA, and the RBI's Survey of Professional Forecasters, projecting GDP growth rates for FY26 in the range of 6.2 per cent and 6.5 per cent.," the finance ministry said in its 'Monthly Economic Review June 2025' released on Monday, July 28. robust services growth, and encouraging signs from manufacturing and agriculture, it added. Agriculture and Rural Sentiment on the Upswing The review highlights encouraging developments in agriculture, thanks to a favourable monsoon. 'Agricultural activity received a significant lift from a favourable southwest monsoon, which arrived early and has so far delivered above-normal rainfall," it said. This, along with sufficient fertiliser availability and healthy reservoir levels, is expected to result in a strong kharif harvest. Citing NABARD's rural sentiment survey, the ministry noted, 'Over 74.7 per cent of rural households expect income growth in the coming year, the highest since the survey's inception." Inflation Offers Room for Policy Support The report said the inflation outlook remains benign, giving policymakers some breathing room. 'Core inflation remains subdued, and overall inflation is comfortably below the RBI's 4 per cent target, affording room for the easing cycle to be sustained," the ministry said. The Reserve Bank of India has projected headline inflation at 3.4% for Q2 FY26. The report further adds, 'It appears likely that the full fiscal year inflation rate would undershoot the central bank's expectation of 3.7 per cent." The moderation is partly linked to global oil price trends. 'Global crude oil prices are expected to remain subdued, following a larger-than-anticipated production hike by OPEC and its allies," the ministry noted, adding that the increase amounted to 548,000 barrels per day in August. Fiscal and Monetary Support Continue The report highlighted a growth-oriented yet disciplined approach to public finances. 'The revenue sources remain buoyant despite the tax cuts, continuing on the double-digit growth path," the ministry said. However, on the credit front, the situation appears mixed. 'Despite monetary easing and a strong bank balance sheet, credit growth has slowed," it said, attributing the drag to 'cautious borrower sentiment and possibly risk-averse lender behaviour." Risks Linger, Even as Growth Path Holds While the outlook for FY26 is broadly positive, the review does not overlook risks. 'The global slowdown, particularly in the US (which shrank by 0.5 per cent in Q1 2025), could dampen further demand for Indian exports," it warned. The ministry also cautioned against over-relying on real GDP estimates in light of wholesale deflation. 'Given the deflationary trend in the wholesale price index, one has to observe economic momentum in nominal quantities." Summing up the outlook, the ministry said: 'All that said, the economy has the look and feel of 'steady as she goes' as far as FY26 is concerned." Looking ahead, the report pointed to global supply chain shifts — especially in semiconductors, rare earths, and magnets — as a strategic opportunity. 'In the medium term, given the ongoing momentous shifts in global supply chains… India has its task cut out," the ministry concluded. Stay updated with all the latest business news, including market trends, stock updates, tax, IPO, banking finance, real estate, savings and investments. Get in-depth analysis, expert opinions, and real-time updates—only on News18. Also Download the News18 App to stay updated! tags : Finance Ministry report indian economy view comments First Published: Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Time of India
a day ago
- Business
- Time of India
India's Q1 trade shines: Core merchandise exports up 7.2 per cent; rupee, forex reserves show resilience, says Economic Affairs department
Representative AI image India's trade performance showed strength in the first quarter of financial year 2026, as reported in the Monthly Economic Review by the Department of Economic Affairs (DEA). The report, cited by ANI, indicated total exports, encompassing goods and services, increased by 5.9 per cent year-on-year (YoY) in April-June FY26. Core merchandise exports, excluding petroleum and gems & jewellery, registered a growth of 7.2 per cent YoY. These statistics demonstrate India's robust external sector performance amidst global economic challenges. The report further claimed, "Amid shifting global trade patterns, India's trade performance remains resilient in Q1 of FY26." Foreign exchange reserves maintained sufficient levels, ensuring import coverage exceeding 11 months, signifying India's economic stability and protection against external disturbances. The Indian rupee displayed stability despite global oil price variations and a short-term Middle East conflict, with the exchange rate remaining stable through June 2025. The assessment addressed the wider global trade situation, noting that ongoing geopolitical tensions have introduced additional uncertainties to international trade flows. Global trade in goods and services showed stability in the initial half of 2025, with a USD 300 billion increase. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like These Are The Most Beautiful Women In The World Undo UNCTAD's July 2025 assessment revealed that global trade experienced a slowdown in 2025's first quarter, followed by recovery in the second quarter. Developed nations led trade growth, whilst developing countries showed reduced performance compared to previous quarters. Trade-related uncertainty showed improvement. The Trade Policy Uncertainty Index, reaching its highest in April 2025, decreased by approximately 35 per cent month-on-month by June 2025, suggesting enhanced stability in global trade policies. Nations worldwide are increasingly adopting bilateral discussions to address trade disagreements. Additionally, countries are strengthening supply chain stability through domestic production incentives in essential sectors and geographical diversification of suppliers. These strategies seek to maintain sustainable and stable trade operations in the current divided global economic landscape. Stay informed with the latest business news, updates on bank holidays and public holidays . Discover stories of India's leading eco-innovators at Ecopreneur Honours 2025
Fibre2Fashion
a day ago
- Business
- Fibre2Fashion
India's economy enters Q2 FY26 on relatively firm footing: Govt
India's economy entered the second quarter (Q2) of fiscal 2025-26 (FY26) on a relatively firm footing, following resilient domestic supply and demand fundamentals in Q1, inflation being within the target range and monsoon progress on track, according to the Finance Ministry's Monthly Economic Review for June. The country's economic activity in Q1 FY26 was underpinned by strong domestic demand, robust services growth and encouraging signs from manufacturing and agriculture. India's economy entered Q2 FY26 on a relatively firm footing, following resilient domestic supply and demand fundamentals in Q1, inflation being within the target range and monsoon progress on track, the Finance Ministry said. Q1 economic activity was underpinned by strong domestic demand, robust services growth and encouraging signs from manufacturing and agriculture. The economy has the look and feel of 'steady as she goes' as far as FY26 is concerned, it noted, adding that the economy in mid-2025 presents a picture of cautious optimism. Domestic financial markets have demonstrated notable resilience, primarily driven by strong domestic investor participation. This resilience is further underpinned by the robust health of the banking sector, as banks have strengthened their capital and liquidity buffers while improving their asset quality, the document said. Agricultural activity received a significant lift from a favourable southwest monsoon, which arrived early and has so far delivered above-normal rainfall. Fertiliser availability and reservoir levels are more than adequate, suggesting a strong outlook for the kharif sowing and harvest and consequent rural income and demand. "The agriculture sector's steady performance continues to serve as a stabilising pillar for the broader economy and bolsters the rural outlook. According to NABARD's rural sentiment survey, over 74.7 per cent of rural households expect income growth in the coming year, the highest since the survey's inception," the Economic Review noted. While geopolitical tensions have not elevated further, the global slowdown, particularly in the United States (which shrank by 0.5 per cent in Q1 2025), could dampen further demand for Indian exports. Continued uncertainty on the US tariff front may weigh on India's trade performance in the coming quarters, the document said. Slow credit growth and private investment appetite may restrict acceleration in economic momentum, the report added. Fibre2Fashion News Desk (DS)
Business Standard
a day ago
- Business
- Business Standard
High-frequency indicators reflected broad-based strength in Indian economy says Department of Economic Affairs
India's economy sustained its growth momentum in the first quarter of FY26, supported by robust domestic demand, resilient business and services activity, and a favourable onset of the southwest monsoon, according to Monthly Economic Review report released by the Department of Economic Affairs (DEA). High-frequency indicators reflected broad-based strength, registering strong year-on-year growth. While the manufacturing and construction sectors continued to expand, the services sector anchored the overall economic growth in Q1 of FY26. As of now, favourable progress in the southwest monsoon has bolstered agricultural activity, leading to higher kharif sowing compared to the previous year. Adequate fertiliser availability and comfortable reservoir levels augur well for a healthy harvest outlook, providing fresh impetus to rural incomes and consumption. Inflationary pressures continue to recede in Q1 of FY26, with CPI inflation falling to a 77-month low of 2.1 per cent in June 2025. This sharp moderation was driven by a significant decline in food inflation, particularly in the prices of vegetables and pulses. Wholesale price inflation also moved into the deflationary zone at -0.1 per cent, providing further relief on the cost front.
Mint
2 days ago
- Business
- Mint
Easing inflation widens space for further rate cuts: Finmin June Economic Review
New Delhi: The finance ministry on Monday held out hopes of further interest rate cuts, citing muted core inflation, coupled with headline inflation falling well below the Reserve Bank of India's (RBI's) 4% target. 'Core inflation remains subdued, and overall inflation is comfortably below the RBI's 4% target, affording room for the easing cycle to be sustained,' the ministry noted in its June Monthly Economic Review. The RBI has projected headline inflation at 3.4% for the second quarter of FY26, while actual inflation in Q1 came in below the central bank's target. 'It appears likely that the full fiscal year inflation rate would undershoot the central bank's expectation of 3.7%,' the ministry added. With price pressures easing and growth remaining a priority, the RBI has cut policy rates three times in 2025, lowering the repo rate by a cumulative 100 basis points from 6.50% to 5.50%. The easing cycle began with a 25-basis point cut in February, followed by another in April and a sharper 50-basis point reduction in June, marking a decisive turn towards an accommodative stance. Between January and June 2025, retail inflation eased steadily, offering crucial support to the RBI's rate-cutting cycle. Headline CPI inflation declined from 4.31% in January to a 77-month low of 2.10% in June, driven largely by a sharp fall in food prices, especially vegetables and a favourable base effect. Food inflation turned negative in June, pulling down overall price pressures, even as core inflation remained sticky, hovering around 4.4%. However, despite monetary easing and improved banking sector balance sheets, credit growth has shown signs of slowing, reflecting a mix of cautious borrower sentiment and risk-averse lender behaviour, the economic review said. "A growing preference for bond markets, particularly commercial papers among corporates due to lower borrowing costs, may also explain the shift," it said. "Piggybacking on initiatives like the Employment Linked Incentive (ELI) scheme, it is time for corporates to set the ball in motion," it added. To be sure, despite the potential on the domestic front, global geopolitical and economic risks remained elevated. The war in Ukraine, with renewed Russian offensives, along with rising instability in West Asia, continued to cloud the global economic outlook, adding pressure on supply chains and investor sentiment. "Despite the broadly positive outlook, downside risks remain. While geopolitical tensions have not elevated further, the global slowdown, particularly in the US (which shrank by 0.5% in Q1 2025), could dampen further demand for Indian exports," the review said. "Continued uncertainty on the US tariff front may weigh on India's trade performance in the coming quarters," it added. India and the US, meanwhile, have been negotiating trade deal, working to an end-of-August deadline. Meanwhile, the review cautioned that slow credit and tepid private investment may constrain growth acceleration, even as deflation in wholesale prices skews real economic indicators. 'Measured in constant prices, economic activity may appear healthier than it is. All that said, the economy has the look and feel of 'steady as she goes' as far as FY26 is concerned,' it said. 'In the medium term, given the ongoing momentous shifts in global supply chains in the areas of semiconductor chips, rare earths and magnets, India has its task cut out,' it added.
