Indian economy shows resilience despite weak global growth: RBI

IANS May 22, 2025 368 views

The Reserve Bank of India has highlighted the remarkable resilience of the Indian economy in the face of global economic challenges. Despite persistent trade frictions and policy uncertainties, India's economic indicators show promising signs of stability and growth. A bumper agricultural harvest, falling inflation rates, and improving financial market sentiments contribute to this positive outlook. The RBI's assessment suggests that India is well-positioned to navigate the complex global economic landscape with confidence and adaptability.

"Amidst these challenges, the Indian economy exhibited resilience" - RBI Bulletin
Indian economy shows resilience despite weak global growth: RBI
New Delhi, May 22: The global growth continues to face headwinds with persistent trade frictions, heightened policy uncertainty, and weak consumer sentiment weighing on the outlook. Despite this, the Indian economy is exhibiting resilience even after high trade and tariff-related concerns, the Reserve Bank of India (RBI) has said.

Key Points

1

RBI reports steady economic indicators despite global trade friction

2

Inflation drops to lowest level since July 2019

3

Bumper rabi harvest and favorable monsoon forecast boost agriculture

4

Domestic equity market gains momentum in April

Persistent trade frictions, heightened policy uncertainty, and weak consumer sentiment continue to create headwinds for global growth.

“Amidst these challenges, the Indian economy exhibited resilience. Various high frequency indicators of industrial and services sectors sustained their momentum in April,” according to the RBI Bulletin.

A bumper rabi harvest and higher acreage for summer crops, coupled with favourable southwest monsoon forecasts for 2025, augur well for the agriculture sector.

Headline CPI inflation fell for the sixth consecutive month to its lowest since July 2019, primarily driven by the sustained easing in food prices. Domestic financial market sentiments, which remained on edge in April, witnessed a turnaround since the third week of May, said the Bulletin.

The year-on-year inflation rates based on the all-India consumer price index for agricultural labourers (CPI-AL) and rural labourers (CPI-RL) for April this year eased further to 3.48 per cent and 3.53 per cent, respectively -- compared to 7.03 per cent and 6.96 per cent in April 2024 -- bringing respite to poor households.

Also, the domestic equity market, which declined initially in response to the tariff announcements by the US, gained momentum in the second half of April in the wake of robust corporate earnings reports for Q4 by some banking and financial sector companies.

Moreover, the growth rate in notes in circulation (NiC, in value terms) during 2014-2024 was significantly lower as compared to that in the previous two decades.

The growth in NiC was noticeably higher than that in GDP during 1994 - 2004; the gap, however, has significantly reduced in the next two decades.

There exists positive relationship between nightlights and taxes and also between nightlights and GDP. It means that formal economic activity reduces the use of banknotes, said the Bulletin.

Reader Comments

R
Rajesh K.
Good to see our economy holding strong despite global challenges! The agriculture sector performance is particularly encouraging - a good monsoon means happy farmers and stable food prices. 🇮🇳 But we must remain cautious about global trade tensions affecting our exports.
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Priya M.
While the numbers look positive, I'm not feeling this resilience in my daily life. Petrol prices are still high and my grocery bill hasn't come down much. RBI should ensure these macroeconomic improvements actually benefit common people like us.
A
Amit S.
The reduction in inflation is a big relief! Last year's vegetable prices were giving us heart attacks. 😅 Hope the monsoon predictions hold true - our economy still dances to the rain gods' tune. The digital payments revolution is clearly reducing cash dependence as mentioned.
S
Sunita R.
As a small business owner, I've noticed more digital transactions since demonetization. The nightlights-GDP correlation is interesting - shows how formalization is changing our economy. But banks need to reduce charges on digital payments to encourage more adoption.
V
Vikram J.
The stock market recovery shows foreign investors still have faith in India's growth story. But we need to focus more on manufacturing - can't just rely on services and agriculture. Make in India needs stronger implementation to create jobs.
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Neha P.
Positive news overall, but I'm concerned about job creation. Economic growth numbers don't mean much if quality employment isn't increasing. Hope the RBI and government work together to address this critical issue.

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Tags:
Indian Economy RBI Inflation Economic Resilience Agricultural Sector Monetary Policy