Healthy demand, industrial resilience help India tide over global uncertainties; fiscal deficit a concern: RBI bulletin

Healthy demand coupled with a resilient industrial and services sector helped the Indian economy navigate the global uncertainties in June, according to the Reserve Bank of India’s bulletin for July.

The bulletin said the global economy remains clouded by renewed geopolitical tensions but India's macroeconomic fundamentals continue to remain well anchored. It, however, pointed out that the Centre’s fiscal deficit was higher during April-May, 2026-27, as compared to the corresponding period of the previous year.

“The global economy is continuing with the heightened uncertainties emanating from fragile geopolitics and supply chain pressures. The domestic economy has navigated the external uncertainties well, underpinned by healthy demand conditions and the resilient performance of the industrial and services sector,” the RBI bulletin said.

The central bank said increased foreign investment inflows also aided the country's external sector.

“Headline retail inflation inched up in June, while core inflation, especially excluding precious metals, remained low. Liquidity conditions improved further, supporting the ongoing robust credit growth. India’s external sector remains steady with an improving outlook, aided by inflows of foreign investments,” the bulletin added.

It pointed out that the domestic economy continued to remain robust in June. “The domestic economy continued to remain buoyant in June. Demand conditions remained healthy, supported by a pickup in rural demand and firm urban demand. High-frequency indicators suggest robust industrial performance and a resilient services sector,” it said.

The bulletin said demand conditions remained healthy in June, supported by a pickup in rural demand and sustained strength in urban consumption. “High-frequency indicators pointed to robust industrial activity and a resilient services sector, although kharif sowing has been delayed due to uneven monsoon progress under prevailing El Niño conditions,” it said, adding that ample available public foodgrain stocks should help cushion any food price pressures.

The bulletin also highlighted that India's exports and imports recorded strong growth during the first quarter of FY27, reflecting sustained momentum in external trade.

“The momentum in external trade sustained as reflected in high growth in exports and imports in Q1:2026-27," the bulletin added.

"Overall, the risk to the growth outlook remains tilted to the downside, clouded by the possibilities of renewed tensions in West Asia, associated disruptions in global supply chains, and sustained inflationary pressures," it added.