Indian economy resilient despite global flux, central bank bulletin says
MUMBAI, June 25 (Reuters) - India's economy remains resilient despite a state of flux in the global economy due to the twin shocks from trade and geopolitical tensions, the Reserve Bank of India said in its monthly bulletin released on Wednesday.
The RBI cut its key policy rate by a larger-than-expected 50 basis points earlier this month and slashed the reserve ratio for banks as low inflation gave it room to focus on supporting growth amid volatile global conditions.
"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 RBI said in its 'State of the Economy' article.
"Agriculture showed a broad-based increase in production across most major crops during 2024-25. The domestic prices situation remains benign with headline inflation staying below the target for the fourth consecutive month in May," it said.
India's annual retail inflation slowed to 2.82% in May, the lowest in more than six years, from 3.16% in April.
Financial conditions remain conducive to facilitate an efficient transmission of rate cuts to the credit market, the central bank said in the bulletin.
The trade policy outcomes in July, after the temporary tariff hiatus is over, and the future course of geopolitical events would likely shape medium-term economic prospects, the RBI said.
"Going forward, as noted by the MPC (monetary policy committee) in its resolution, the MPC decided to remain data-dependent to chart the future course of monetary policy and strike the appropriate growth-inflation balance," it said.
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