New Delhi, Dec 22 (UNI): India’s economy is displaying a steady underlying resilience even as global uncertainty, volatile commodity prices, and uneven recovery continue to weigh on major economies.
The latest central bank assessment released on Monday points to a domestic growth engine that remains intact, supported by stable consumption, sustained credit expansion, improving corporate balance sheets, and continued public investment, suggesting that the economy is navigating external headwinds with increasing confidence.
High-frequency indicators show that domestic demand continues to provide a strong anchor. Urban consumption has remained resilient, supported by steady employment conditions and improving income visibility, while rural demand is gradually gaining traction with easing input costs and better agricultural prospects. Services activity remains robust, reflecting sustained momentum in travel, trade, transport, and financial services, which together are reinforcing overall economic stability.
Industrial activity continues to show expansion, driven by manufacturing resilience and infrastructure-led growth. Core industries have maintained momentum, supported by government capital expenditure and rising private sector participation. Capacity utilisation levels indicate that investment conditions are improving, with businesses increasingly willing to expand operations as balance sheets strengthen and demand visibility improves.
One of the most notable features of the current economic landscape is the strong flow of bank credit. Lending to industry, services, and personal loans continues to grow at a healthy pace, reflecting improved risk appetite among lenders and stronger borrower balance sheets. Credit to productive sectors, including MSMEs, has shown sustained traction, underscoring the gradual broadening of economic recovery beyond a few headline sectors.
Inflation dynamics have shown signs of moderation, although risks remain.
Food prices, which have been a major source of volatility, are showing early signs of easing, while core inflation remains contained. The central bank’s assessment suggests that price pressures are increasingly aligned with the medium-term target, offering policy space while maintaining vigilance against global shocks, especially those arising from energy markets and climate-related disruptions.
External sector conditions remain manageable. India’s foreign exchange reserves provide a strong buffer against global volatility, while the current account position reflects stable export performance and controlled import growth. Although global trade remains subdued, India’s diversified export base and steady services exports continue to offer resilience.
Liquidity conditions in the financial system remain adequate, supporting orderly transmission of monetary policy. Financial markets have remained stable, with orderly movements in bond yields and currency markets reflecting confidence in macroeconomic fundamentals. The banking system remains well-capitalised, with declining non-performing assets further strengthening financial stability.
The central bank’s outlook underscores that while the global environment remains fragile, India’s growth is increasingly driven by domestic factors. Structural reforms, sustained public investment, improving logistics, and digitalisation are reinforcing productivity and competitiveness across sectors.
At the same time, policymakers remain alert to risks stemming from geopolitical tensions, climate events, and financial market volatility.
Overall, the assessment points to an economy that is not overheating, nor slowing sharply, but progressing along a path of calibrated expansion. The balance between growth and price stability appears to be holding, supported by prudent macroeconomic management and resilient domestic demand.
As India moves through the remainder of the year, the emphasis remains on sustaining growth momentum while anchoring inflation expectations and safeguarding financial stability. The evolving economic narrative suggests that India is entering a phase where resilience, rather than acceleration alone, defines strength—an approach that could prove decisive in an increasingly uncertain global environment.
India’s economy shows strength as demand, credit and investment hold firm: RBI Bulletin
