| The RBI released its monthly bulletin for December 2025. The RBI mentioned that global uncertainty retreated further from its highly elevated levels. Major equity markets experienced volatile movements due to concerns about stretched market valuations.
The Indian economy, supported by resilient domestic demand in Q2:2025-26, grew at its fastest pace in the last six quarters. High-frequency indicators for November suggest that overall economic activity has held up with demand conditions remaining robust. Headline CPI inflation edged up but continued to remain below the lower tolerance level.
Financial conditions remained benign, and the flow of financial resources to the commercial sector remained robust. India’s current account deficit moderated in Q2:2025-26 over the same period last year, supported by a lower merchandise trade deficit, robust services exports, and strong remittance receipts.
The Indian economy was not fully immune to the external sector headwinds. Coordinated fiscal, monetary and regulatory policies have helped to build resilience over the year. Bolstered by strong domestic demand, the economic growth has been robust.
Benign inflation outlook provided adequate space for monetary policy to support growth. Continued focus on macroeconomic fundamentals and economic reforms should help unlock efficiencies and productivity gains to firmly keep the economy on the high-growth trajectory amidst a fast-changing global environment. |