India’s economy continues to display remarkable resilience despite mounting global uncertainties, with robust growth in both the industrial and services sectors. According to the Reserve Bank of India’s (RBI) latest monthly bulletin, high-frequency indicators point to sustained momentum in economic activity. This consistent performance is further reinforced by a favorable inflation outlook, with headline inflation staying within the RBI’s tolerance band of 4 percent for the fourth consecutive month in May, contributing to overall macroeconomic stability. The central bank also noted that financial conditions remain supportive, allowing for effective transmission of recent monetary policy changes. Following a 50 basis point cut in the repo rate aimed at stimulating growth, early indications suggest an uptick in credit activity across the economy.

While the global environment remains uncertain due to escalating trade tensions and geopolitical conflicts—particularly the Iran-Israel situation—the domestic economy appears largely unfazed. The RBI highlighted volatility in global financial and commodity markets, with rising crude oil prices and increased gold demand reflecting broader investor caution. Nevertheless, investor sentiment in India remained largely positive in May and early June, helped in part by temporary tariff suspensions by the United States.

India also led global peers in Purchasing Managers' Index (PMI) rankings for May, driven by a sharp increase in new export orders. This performance stood in contrast to declines observed in other major economies. On the domestic front, rural consumption is gathering pace, thanks to a strong agricultural season. Manufacturing firms reported capacity utilization above long-term averages, and agricultural production expanded across most key crops in the 2024–25 season. Consumer surveys suggest that current sentiment is stable and optimism for the future is on the rise. Drawing on these developments, the RBI concluded that the Indian economy remains on a firm footing, capable of withstanding external headwinds and continuing its growth trajectory.