Indian economy remained fluid amidst tariff policy uncertainties: RBI Bulletin
geopolitical tensions
and
tariff policy uncertainties
, Reserve Bank's Bulletin said on Wednesday.
An article on 'State of the Economy' in July Bulletin said the global macroeconomic environment remained fluid in June and July so far amidst geopolitical tensions and tariff policy uncertainties.
"Domestic economic activity held up, with improving kharif agricultural season prospects, continuation of strong momentum in the services sector and modest growth in industrial activity," it said.
by Taboola
by Taboola
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
Why Walgreens Hides This Cheap 87¢ Generic Cialis
fridayplans
Learn More
The bulletin also mentioned that headline CPI inflation remained below 4% for the fifth consecutive month in June driven by deflation in food prices.
System liquidity remained in surplus to facilitate a faster transmission of policy rate cuts to the credit markets.
Live Events
The external sector remained resilient, backed by ample
foreign exchange reserves
and a moderate external debt-to-GDP ratio, it mentioned.
The central bank, however, said the views expressed in the Bulletin article are of the authors and do not represent the views of the Reserve Bank of India.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
26 minutes ago
- Mint
RBI MPC outcome tomorrow: From rate pause to dovish stance — Here's what Indian stock market investors can expect
RBI MPC meeting August 2025: The Reserve Bank of India (RBI) Monetary Policy Committee meeting, which started on August 4, will conclude on Wednesday, August 6, presented by Governor Sanjay Malhotra. The consensus suggests that the RBI is likely to hold the gunpowder dry for now and is unlikely to announce any rate cuts. Despite fresh trade tensions sparked by US President Donald Trump's move to impose a 25% tariff on Indian goods and looming sanctions over Russian oil imports—India's central bank is expected to stay the course on interest rates, shows a Mint poll of 15 economists. Only four of them anticipate a 25 basis points cut to 5.25% in the upcoming MPC outcome. RBI has implemented a sharp rate-cutting cycle over its past three policy meetings, lowering the benchmark interest rate from 6.5% to 5.5% in total, after maintaining a steady rate for eleven months. 'Complementing this rate-cut cycle, the central bank also delivered a substantial 100-basis-point reduction in the Cash Reserve Ratio during its previous meeting, a move expected to infuse approximately ₹ 2.5 trillion into the banking system by November 2025, significantly enhancing systemic liquidity,' said Sugandha Sachdeva, Founder, SS WealthStreet. Here are the top 4 expectations of the Indian stock market from the upcoming RBI MPC meeting - The upcoming August monetary policy meeting is set against the backdrop of a significant decline in headline inflation in recent months, mainly due to falling food prices. Inflation is expected to remain below the 4% target on average over the next two quarters, aided by a favourable base effect and subdued food inflation. 'The MPC is widely expected to hold the policy rate steady at 5.5% in the upcoming meeting, allowing the economy more time to absorb the transmission of earlier rate cuts. A pause at this juncture would be consistent with the RBI's forward-looking approach, especially as previous liquidity injections and rate reductions are still working their way through the system,' Sachdeva said. She further added, ' While a further 25bsp rate cut cannot be entirely ruled out, it appears unlikely in the immediate term, given the front-loaded nature of recent policy action. That said, with inflation well within the RBI's comfort zone and external risks still unfolding, the probability of additional easing in the next policy review remains firmly on the table.' However, Anuj Gupta, Director, Ya Wealth Research & Advisory, also believes a 25 bps rate cut is likely. 'This is likely to happen because of the focus on the upcoming festival season. The past data show a clear trend that any repo rate cut ahead of Diwali results in higher credit growth during the festive period. This step will provide liquidity to the markets, and the market may take support from it,' said Gupta. According to the CareEdge Ratings report on RBI Policy, the CPI inflation eased further to 2.1% in June, coming below expectations and marking the lowest print since January 2019. 'Overall inflationary environment is likely to remain favourable over the next few quarters. However, inflation is likely to inch up above the 4% mark in the fourth quarter of this fiscal year as the favourable base effect wanes. CPI inflation is likely to undershoot the RBI's FY26 projection of 3.7%. Accordingly, the RBI may revise its inflation forecast downward. We expect CPI inflation to average around 3.1% in FY26. Given the low base of FY26, we expect average CPI inflation to be higher, around 4.5% in FY27,' the report said. Sugandha Sachdeva of SS WealthStreet highlighted that these accommodative policy measures have been strategically aimed at reviving economic momentum, improving credit flow, and stimulating aggregate demand in the face of slowing global growth and trade tariff-related challenges. 'However, the outlook is not without risks. Ongoing trade tensions and escalating tariffs imposed by the United States pose potential downside risks to India's external sector and overall growth trajectory. These global headwinds could prompt the central bank to retain a dovish tone,' she said. The RBI's liquidity injection has kept the overall banking system liquidity in surplus. The announced phased 100 bps CRR cut beginning September is expected to inject about ₹ 2.5 trillion of durable liquidity into the system by December, according to the CareEdge report. Additionally, RBI's record ₹ 2.7 trillion dividend transfer to the Government adds to the durable liquidity, which should flow into the system as government spending remains healthy, the report added. Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
Time of India
36 minutes ago
- Time of India
Trump's tariff threats & jibes: India calls out US, EU hypocrisy in clear message, says ‘revealing that countries criticizing…'
After imposing a 25% tariff on India last week, Trump targeted Russia and India, calling them 'dead economies'. (AI image) US President Donald Trump's 25% tariff, threats of higher duties, additional penalties, and jibes calling India a 'dead economy' don't appear to have gone down well with India. The Narendra Modi government is calling out the hypocrisy of the Western countries like the US and European Union on oil trade with Russia, and also asserting that India is a 'bright spot' in the global economic scenario. After imposing a 25% tariff on India last week, Trump had targeted Russia and India, calling them 'dead economies'. Trump's pressure tactics on getting India to stop buying oil from Russia don't seem to be working as Russian crude continues to flow. India is working on countering the impact of America's 25% tariff on Indian goods exported to the US. A Rs 20,000 crore plan is being readied by the government and there is a push to encourage homegrown brands. Also Read | Amidst Donald Trump's tariff threats, India plans big! Rs 20,000 crore project being readied for exporters; 'Brand India' to be promoted Trump on Monday posted on Truth Social, 'India is not only buying massive amounts of Russian Oil, they are then, for much of the Oil purchased, selling it on the Open Market for big profits. They don't care how many people in Ukraine are being killed by the Russian War Machine. Because of this, I will be substantially raising the Tariff paid by India to the USA. Thank you for your attention to this matter!!!' The foreign ministry was quick to respond with a 6-point rebuttal. From continuing to buy Russia oil, securing national interest to asserting India's growing economic clout and hitting out at the West for its double standards - here's a look at India's strategy: India's clear message to US: Top 10 points 1) India's oil strategy beneficial for world: The ministry of external affairs has said that while India has faced criticism from the United States and European Union regarding its Russian oil imports, its decision to source oil from Russia stemmed from the redirection of conventional supplies to Europe during the crisis. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 20 Legendary Cars from the Past Undo The US actually supported India's imports at the time, viewing it as beneficial for stabilising global energy markets, the MEA statement said. 2) Why criticize India? India has said that its procurement of energy resources aims to provide stable and cost-effective solutions for its citizens. These purchases are essential due to prevailing international market conditions. 'However, it is revealing that the very nations criticizing India are themselves indulging in trade with Russia. Unlike our case, such trade is not even a vital national compulsion,' India has hit out. Also Read | How India, China may not come to Trump's rescue to get Putin to stop Russia-Ukraine war 3) Europe's trade with Russia: India was quick to point out that the European Union's trade relationship with Russia in 2024 included goods worth Euro 67.5 billion. The services trade was valued at Euro 17.2 billion in 2023. These figures are way more than India's overall trade with Russia during that period. European LNG imports notably peaked at 16.5mn tonnes in 2024, more than previous high of 15.21mn tonnes in 2022. 4) Europe imports several things from Russia: India also said that the trade between Europe and Russia extends beyond energy resources, including diverse sectors such as fertilisers, mining products, chemicals, iron and steel products, as well as machinery and transport equipment. 5) US trade with Russia: India highlighted that the United States maintains its imports of various products from Russia, including uranium hexafluoride for nuclear facilities, palladium for electric vehicle production, along with fertilisers and chemical products. Also Read | Russia oil in focus: Tankers deliver millions of barrels of Russian crude to India; no impact of Trump, EU pressure yet 6) 'National interests' important: The message was clear - given these circumstances, singling out India appears unwarranted and illogical. 'In this background, the targeting of India is unjustified and unreasonable. Like any major economy, India will take all necessary measures to safeguard its national interests and economic security,' the MEA statement said. 7) No stop on Russia oil procurement: India is continuing with its Russian crude oil imports despite mounting pressure from both the European Union and the Donald Trump administration. The continuous flow of Russian oil shipments was evident as several tankers discharged millions of barrels at Indian refineries over the weekend. India has also indicated that it maintains a strong relationship with Russia. Speaking on Friday, foreign ministry spokesperson Randhir Jaiswal characterised this bilateral connection as a "steady and time-tested partnership. " 8) PM Modi's call for buying local: In the midst of the US tariff stalemate, PM Modi has stressed the importance of safeguarding India's interests during global economic uncertainty. "The world economy is going through many apprehensions — there is an atmosphere of instability," Modi said at a rally in Uttar Pradesh on Saturday. "Now, whatever we buy, there should be only one scale: we will buy those things which have been made by the sweat of an Indian. " Modi's emphasis on bolstering domestic production and consumption is consistent with his existing "Make in India" initiative. This strategy has gained additional relevance in light of the recent US trade measures and Modi's remarks suggest a defiant note on US threats. Also Read | Big message! PM Modi strikes defiant 'Make in India' note in face of Trump's tariff & penalty threats; India to continue buying Russia oil During Saturday's gathering, Modi said: "The interests of our farmers, our small industries and the employment of our youth are of paramount importance." 9) Indian Army's dig at US: In a dig at America, the Indian Army shared a significant historical reference on Tuesday, emphasising the US support to Pakistan during the 1971 conflict. The Army's social media account featured a post titled "This Day That Year – Build Up of War – 05 Aug 1971 #KnowFacts", accompanied by a vintage newspaper headline saying "US ARMS WORTH $2 BILLION SHIPPED TO PAKISTAN SINCE '54." 10) Dead economy? Third largest economy soon: Last week, commerce minister Piyush Goyal, while addressing the Parliament asserted that India is the fastest growing economy in the world. Goyal's statement in the context of the 25% tariff rate on India, was also seen as a response to Trump's 'dead economy' jibe. 'In just over a decade, India has rapidly transformed from being one of 'Fragile Five' to the fastest growing major economy in the world. Today, international institutions and economists see India as the bright spot in the global economy. India is contributing to almost 16% of global growth,' Goyal said. 'We have risen from the 11th largest economy to one of the top 5 economies driven by our reforms, hard work of our farmers, MSMEs, and entrepreneurs. It is also widely expected that we will become the third largest economy in a few years,' he added. Also Read | 'More likely to happen in Lagaan, than...': Harsh Goenka mocks Trump's 'Pakistan may sell oil to India' suggestion; here's the reality of Pak's 'massive' reserves 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
Time of India
40 minutes ago
- Time of India
India's set for significant output surge: Credit growth, consumer demand, macro tailwinds in focus, says Morgan Stanley; oil prices, geopolitics seen as key risks
India is positioned to emerge as a more significant player in the global economy in the forthcoming decades, based on an analysis by Morgan Stanley. The analysis indicated that India's increased credit-to-GDP ratio and expanding manufacturing sector will enhance its global economic influence. The nation's growth trajectory is supported by several key factors, including sustained demographic growth, democratic governance, consistent macroeconomic policies, enhanced infrastructure, rising entrepreneurship, and improved social indicators. "India will become the world's most sought-after consumer market, it will undergo a major energy transition, credit to GDP will rise and manufacturing could gain share in GDP," the report cited by ANI claimed. Also read: India's services sector logs 11-month high- Export orders, sales drive July growth The analysis forecasts India's evolution as a prime consumer market globally. The country is anticipated to implement significant energy reforms whilst experiencing substantial growth in its credit and manufacturing segments. The report indicated that reduced oil dependency in GDP calculations and increased exports, particularly in services, will contribute to fiscal strengthening. Within three years, the government is expected to achieve a primary surplus. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Use an AI Writing Tool That Actually Understands Your Voice Grammarly Install Now Undo This development, if achieved, coupled with decreased saving disparities, might result in fundamentally lower real interest rates. The combination of sustained growth, reduced volatility and declining interest rates is projected to support higher P/E ratios in the equity markets. Indian households are increasingly investing in equities, a trend that is likely to persist. Enhanced macroeconomic stability and evolving household financial patterns are maintaining consistent stock market demand. Despite stock devaluation compared to long-term bonds and gold, India continues to increase its proportion of global GDP. Additionally, the analysis suggests that the period of modest earnings growth, which commenced in the second quarter of FY2025, appears to be concluding, although market sentiment remains cautious. While FPI positioning is at its lowest since 2000, Morgan Stanley maintains optimism regarding India's future prospects. India's low beta characteristic suggests potential resilience during global market downturns, though it might lag during worldwide market rallies. The analysis also cautions about potential risks including global economic deceleration, deteriorating geopolitical situations, increasing oil prices, and ongoing supply chain complications, particularly regarding rare earth elements and fertilisers. 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
