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News18
29-07-2025
- 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.
The Print
28-07-2025
- Business
- The Print
Indian economy has look and feel of ‘steady as she goes' for FY26: FinMin
With inflation remaining within the target range and monsoon progress on track, the domestic economy enters the second quarter of FY26 on a relatively firm footing. In its monthly economic review, the ministry said the first quarter of fiscal 2025-26 (FY26) presents a picture of resilient domestic supply and demand fundamentals. New Delhi, Jul 28 (PTI) Indian economy has the look and feel of 'steady as she goes' for the current fiscal, the finance ministry said on Monday even as it flagged slowing credit growth. While geopolitical tensions have not elevated further, the global slowdown, particularly in the US (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. Slow credit growth and private investment appetite may restrict acceleration in economic momentum,' it said. Further, given the deflationary trend in the wholesale price index, one has to observe economic momentum in nominal quantities. Measured in constant prices, economic activity may appear healthier than it is, the review report said. 'All that said, the economy has the look and feel of 'steady as she goes' as far as FY26 is concerned,' it said. The report noted despite monetary easing and a strong bank balance sheet, credit growth has slowed, reflecting cautious borrower sentiment and possibly risk-averse lender behaviour. '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, the ministry said it is time for corporates to set the ball in motion. The Reserve Bank has cumulatively reduced the short-term lending rate (repo) by 100 basis points since February. With an outlay of Rs 99,446 crore, the ELI scheme aims to incentivise the creation of more than 3.5 crore jobs in the country over a period of 2 years, with special focus on the manufacturing sector. The report said that 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, it said. The report said 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, the ministry said. PTI NKD HVA This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
Economic Times
28-07-2025
- Business
- Economic Times
'Steady as she goes': How the economy looks and feels
TIL Creatives Representative Image India's economy enters the second quarter of FY26 on a relatively firm footing, as the first quarter of FY26 presents a picture of resilient domestic supply and demand fundamentals with inflation remaining within the target range and monsoon progress on track, said a Finance Ministry report on economy has the look and feel of 'steady as she goes' as far as FY26 is concerned, the Finance Ministry's Monthly Economic Review for June said, even though it pointed out downside risks. "The Indian economy in mid-2025 presents a picture of cautious optimism," the review said. "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." In the review for the previous month of May, the ministry had said India's broader economic health is in a "relative goldilocks situation", with no major imbalances in the macro aggregates, a subdued inflation rate, and a growth-supportive monetary policy stance. These could be "nervous but exciting times" for the Indian economy, it said. Geopolitical shifts may present India with opportunities that appeared remote earlier. But it's "up to us to be flexible enough to ride the tide". More room for the easing cycleThe Finance Ministry report indicates room for further rate cuts for the RBI. "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," it said. "The Reserve Bank of India has projected headline inflation at 3.4 per cent for the Q2 of FY26, while in Q1, actual inflation came below the Q1 target of the RBI. It appears likely that the full fiscal year inflation rate would undershoot the central bank's expectation of 3.7 per cent. Also, global crude oil prices are expected to remain subdued, following a larger-than-anticipated production hike by OPEC and its allies, who raised output by 548,000 barrels per day in August, on top of the production increases announced for the previous months," the monthly review February, the RBI has lowered the repo rate by 100 basis points, or a percentage point, to 5.5%. It has also announced lowering cash reserve ratio by 100 bps in a phased manner beginning September 2025, which is estimated to release Rs 2.5 lakh crore in the banking system. When the central bank's six-member Monetary Policy Committee (MPC) meeting from August 4 to 6, it is expected to deliberate on the policy repo rate using two key data points: the June quarter GDP projections and the latest retail inflation are divided on the trajectory of interest rate cuts, ET has reported today. While some cite six-year low inflation as grounds for another rate cut in the upcoming August policy, the majority advocate for maintaining the status quo. Those calling for a pause argue that it is prudent to wait and assess inflation trends in the coming quarter and monitor developments around the US trade deal. ET reported that economists shared these perspectives with the Reserve Bank of India governor Sanjay Malhotra, deputy governor Poonam Gupta and her team during customary pre-policy consultative meetings held last week. Downside risksA global slowdown could further dampen demand for Indian exports and continued uncertainty on US tariffs may weigh on the country's trade performance in coming quarters, the finance ministry review said. India's goods exports fell to $35.14 billion in June, down 9% from May, and remained nearly flat from a year earlier. The figure was the lowest since November's $32.11 billion, according to LSEG monthly review has also underlined slow credit growth and private investment as risks to growth. "Despite monetary easing and a strong bank balance sheet, credit growth has slowed, reflecting cautious borrower sentiment and possibly risk-averse lender behaviour," it said. However, the trend can also be explained by a growing preference for bond markets, particularly commercial papers among corporates due to lower borrowing costs, it added."Despite the broadly positive outlook, downside risks remain," the review said. "While geopolitical tensions have not elevated further, the global slowdown, particularly in the US (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. Slow credit growth and private investment appetite may restrict acceleration in economic momentum. Further, given the deflationary trend in the wholesale price index, one has to observe economic momentum in nominal quantities. Measured in constant prices, economic activity may appear healthier than it is."
Time of India
28-07-2025
- Business
- Time of India
'Steady as she goes': How the economy looks and feels
India's economy is performing well as it enters the second quarter of fiscal year 2026. Domestic supply and demand are strong. Inflation is within the target range. The monsoon season is progressing as expected. The Finance Ministry expresses cautious optimism. India's macroeconomic fundamentals are resilient despite global challenges. Experts project GDP growth between 6.2 and 6.5 percent. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads India's economy enters the second quarter of FY26 on a relatively firm footing, as the first quarter of FY26 presents a picture of resilient domestic supply and demand fundamentals with inflation remaining within the target range and monsoon progress on track, said a Finance Ministry report on economy has the look and feel of 'steady as she goes' as far as FY26 is concerned, the Finance Ministry's Monthly Economic Review for June said, even though it pointed out downside risks."The Indian economy in mid-2025 presents a picture of cautious optimism," the review said. "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."In the review for the previous month of May, the ministry had said India's broader economic health is in a "relative goldilocks situation", with no major imbalances in the macro aggregates, a subdued inflation rate, and a growth-supportive monetary policy stance. These could be "nervous but exciting times" for the Indian economy, it said. Geopolitical shifts may present India with opportunities that appeared remote earlier. But it's "up to us to be flexible enough to ride the tide".The Finance Ministry report indicates room for further rate cuts for the RBI. "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," it said."The Reserve Bank of India has projected headline inflation at 3.4 per cent for the Q2 of FY26, while in Q1, actual inflation came below the Q1 target of the RBI. It appears likely that the full fiscal year inflation rate would undershoot the central bank's expectation of 3.7 per cent. Also, global crude oil prices are expected to remain subdued, following a larger-than-anticipated production hike by OPEC and its allies, who raised output by 548,000 barrels per day in August, on top of the production increases announced for the previous months," the monthly review February, the RBI has lowered the repo rate by 100 basis points, or a percentage point, to 5.5%. It has also announced lowering cash reserve ratio by 100 bps in a phased manner beginning September 2025, which is estimated to release Rs 2.5 lakh crore in the banking system. When the central bank's six-member Monetary Policy Committee (MPC) meeting from August 4 to 6, it is expected to deliberate on the policy repo rate using two key data points: the June quarter GDP projections and the latest retail inflation are divided on the trajectory of interest rate cuts, ET has reported today. While some cite six-year low inflation as grounds for another rate cut in the upcoming August policy, the majority advocate for maintaining the status quo. Those calling for a pause argue that it is prudent to wait and assess inflation trends in the coming quarter and monitor developments around the US trade deal. ET reported that economists shared these perspectives with the Reserve Bank of India governor Sanjay Malhotra, deputy governor Poonam Gupta and her team during customary pre-policy consultative meetings held last week.A global slowdown could further dampen demand for Indian exports and continued uncertainty on US tariffs may weigh on the country's trade performance in coming quarters, the finance ministry review said. India's goods exports fell to $35.14 billion in June, down 9% from May, and remained nearly flat from a year earlier. The figure was the lowest since November's $32.11 billion, according to LSEG monthly review has also underlined slow credit growth and private investment as risks to growth. "Despite monetary easing and a strong bank balance sheet, credit growth has slowed, reflecting cautious borrower sentiment and possibly risk-averse lender behaviour," it said. However, the trend can also be explained by a growing preference for bond markets, particularly commercial papers among corporates due to lower borrowing costs, it added."Despite the broadly positive outlook, downside risks remain," the review said. "While geopolitical tensions have not elevated further, the global slowdown, particularly in the US (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. Slow credit growth and private investment appetite may restrict acceleration in economic momentum. Further, given the deflationary trend in the wholesale price index, one has to observe economic momentum in nominal quantities. Measured in constant prices, economic activity may appear healthier than it is."
Economic Times
28-07-2025
- Business
- Economic Times
Indian economy has look and feel of 'steady as she goes' for FY26: Finance ministry
ANI Representational image Indian economy has the look and feel of "steady as she goes" for the current fiscal, the finance ministry said on Monday even as it flagged slowing credit growth. In its monthly economic review, the ministry said the first quarter of fiscal 2025-26 (FY26) presents a picture of resilient domestic supply and demand fundamentals. With inflation remaining within the target range and monsoon progress on track, the domestic economy enters the second quarter of FY26 on a relatively firm footing. While geopolitical tensions have not elevated further, the global slowdown, particularly in the US (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. Slow credit growth and private investment appetite may restrict acceleration in economic momentum," it said. Further, given the deflationary trend in the wholesale price index, one has to observe economic momentum in nominal quantities. Measured in constant prices, economic activity may appear healthier than it is, the review report said. "All that said, the economy has the look and feel of 'steady as she goes' as far as FY26 is concerned," it said. The report noted despite monetary easing and a strong bank balance sheet, credit growth has slowed, reflecting cautious borrower sentiment and possibly risk-averse lender behaviour. "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, the ministry said it is time for corporates to set the ball in motion. The Reserve Bank has cumulatively reduced the short-term lending rate (repo) by 100 basis points since February. With an outlay of Rs 99,446 crore, the ELI scheme aims to incentivise the creation of more than 3.5 crore jobs in the country over a period of 2 years, with special focus on the manufacturing sector. The report said that 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, it said. The report said 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, the ministry said.
