Mumbai: Amid global economic turbulence, India’s economy shines as a beacon of resilience, according to the Reserve Bank of India’s (RBI) latest ‘State of the Economy’ report.
The report delivers a double dose of cheer: retail inflation has plummeted to its lowest since June 2017, and robust domestic demand is powering growth, paving the way for potential interest rate cuts that could ease EMIs for millions.
Despite global trade tensions and slowdown fears, India’s economic engine is humming, driven by strong domestic consumption. The report highlights a resurgence in urban demand and sustained rural strength, bolstered by a thriving agricultural sector. Bumper kharif sowing, above-average rainfall, and record reservoir levels signal a promising rabi season, fuelling rural prosperity.
Meanwhile, business confidence in manufacturing and services has soared to a six-month high, with festive season demand and GST rate reductions expected to further boost production and affordability.
The sharp drop in retail inflation, driven by cheaper food prices, offers relief to household budgets. However, core inflation has ticked up slightly due to rising gold and housing costs. With inflation under control, the RBI sees room for policy measures to spur growth, hinting at possible rate cuts by its Monetary Policy Committee. Lower interest rates could make home, car, and personal loans more affordable, stimulating spending and industrial activity.
Global institutions echo this optimism. The IMF has raised India’s 2025 GDP growth forecast to 6.6%, the OECD to 6.7%, and the World Bank to 6.5%. The RBI itself projects a robust 6.8% growth for 2025-26, underscoring India’s economic might.