Economy remains resilient amid steady domestic demand: RBI Governor
New Delhi, Aug 5
The Indian economy has remained resilient amid persisting global headwinds, RBI Governor Sanjay Malhotra said on Wednesday, adding that high frequency indicators available so far point towards steady domestic demand in Q1 2026-27.
Private consumption remained robust. Investment continues to be resilient, as suggested by various indicators related to construction, capital goods and bank credit, he said while delivering his address after the three-day Monetary Policy Committee (MPC) meeting.
"External demand also sustained, as healthy expansion in services exports was complemented by a rebound in merchandise exports," the RBI Governor maintained.
He said that looking ahead, the turbulent global economic environment is likely to have some bearing on domestic economic activity.
"Energy prices and supply chain pressures remain elevated and uncertain. The adverse impact is being contained with various supply side measures. Even though the situation is still evolving, deficient and uneven south-west monsoon amidst El Nino conditions pose some risks to athe agriculture sector's outlook and rural demand," said Malhotra.
Nevertheless, government initiatives pertaining to crop diversification including short duration as well as climate-resilient crops, and water harvesting and conservation, among others, are expected to mitigate the impact, he informed.
Furthermore, sustained momentum in services, continuing impact of GST rationalisation, and broadly stable employment conditions should continue to support urban demand.
"Strong capacity utilisation, robust credit flow and the government's continued thrust on infrastructure is expected to sustain investment activity. While services exports are expected to sustain, merchandise exports will be supported by the recent trade agreements and thrust on diversification," Malhotra noted.
Growth continues to be supported by resilient domestic demand, sustained expansion in manufacturing and services activity, and robust exports, reaffirming India's position as the world's fastest-growing major economy.
"There is a need for greater clarity to emerge, especially regarding inflation, its path and composition before taking any policy action. Any such action would also have to consider the need for recalibration of policy rates in line with the evolving growth-inflation dynamics, especially the normalisation of the underlying inflation from its benign levels seen hitherto," he explained.
— IANS
Reader Comments
The RBI Governor's assessment seems balanced. It's reassuring that domestic demand is steady despite global headwinds. However, the concern about monsoon and El Nino is valid—our farmers need more support. Let's hope the supply-side measures work well for rural India.
Interesting to see India's growth story staying strong while the rest of the world struggles. The services exports rebound is a positive sign. But I wonder how long this can continue if the monsoons fail. Climate resilience is going to be a key factor for India's economy going forward.
Relieved to hear that RBI is not rushing into rate cuts without clarity on inflation. That's the right approach. We need stable interest rates for our home loan EMIs. Hope the government continues with infrastructure spending as that creates jobs for the youth. 💪
RBI Governor's statement is optimistic, but the mention of "deficient monsoon" worries me. We're already seeing water shortages in many parts of Karnataka. The government's crop diversification plans are good, but implementation at the ground level takes time. Farmers need immediate relief.
India's resilience is impressive, truly. The balance of domestic demand, exports, and infrastructure investment is paying off. I'd be curious to see how the recent trade agreements impact the merchandise numbers in the next few quarters. Solid perspective from RBI.
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