India’s Economic Outlook

MUMBAI (Reuters) – India’s economy remains resilient against global challenges, with strategic policy support potentially transforming current volatility into opportunities, according to the Reserve Bank of India (RBI) in its April bulletin released on Tuesday.

The RBI noted that while the global economic outlook may dampen India’s growth through diminished external demand, the country’s domestic growth factors, such as consumption and investment, are less affected by these external pressures.

Strong domestic growth and solid macroeconomic fundamentals have sustained India’s resilience amidst global trade tensions. Additionally, the forecast for the agricultural sector has improved due to expected above-normal monsoon conditions.

India’s retail inflation dropped to a five-year low of 3.34% in March, driven by declining food prices, allowing room for further cuts in central bank rates as concerns over the U.S.-China trade war potentially impede global growth.

Earlier this month, the RBI reduced its key policy rate for the second time and adjusted its monetary policy stance, while also revising GDP growth estimates for the fiscal year down to 6.5% from 6.7%.

The RBI cautioned that fluctuating global financial conditions may endanger emerging markets and could trigger renewed inflation worldwide.

Looking ahead, India stands to gain from restructured supply chains, diversified foreign direct investment (FDI) sources, and heightened interest from global investors seeking resilience and scale, bolstered by existing trade relationships.

The RBI emphasized that India’s robust services exports and consistent remittance inflows serve as crucial support for the current account.