Indian Economy Remains Resilient Despite Global Trade Tensions: RBI Bulletin

(MENAFN- Kashmir Observer) Mumbai- Indian Economy continues to demonstrate resilience as evident in the robust performance of the Agriculture sector and improving consumption despite escalating trade tensions, the RBI March Bulletin said on Wednesday.

The resilience of the global economy is being tested by escalating trade tensions and a heightened wave of uncertainty around the scope, timing, and intensity of tariffs, said an article on 'State of the Economy' published in the Bulletin.

While engendering heightened volatility in global financial markets, these have also caused apprehensions about the slowdown in global growth, it said.

“Amidst these challenges, the Indian economy continues to demonstrate resilience as evident in the robust performance of the agriculture sector and improving consumption,” it said.

The reverberations of a tumultuous external environment, however, are being reflected in sustained foreign portfolio outflows, said the authors.

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The article further said India's macroeconomic strength to face these challenges is bolstered by a decline in headline CPI inflation to a seven-month low of 3.6 per cent in February 2025 on account of a further correction in food prices.

The RBI, however, said the views expressed in this article are those of the authors and do not represent the views of the Reserve Bank of India.

India's Structural Strengths Provide Strong Foundation For Growth

Sound fiscal policies, a well-calibrated monetary framework, and digital transformation initiatives are expected to provide a strong foundation for long-term sustainable economic growth, said RBI March Bulletin released on Wednesday.

It also said that macroeconomic fundamentals remain strong, and economic growth is poised to sustain momentum driven by robust domestic demand, steady investment activity, and ongoing policy-driven infrastructure development along with a pick-up in government spending.

An article on 'State of the Economy' published in the Bulletin noted that the resilience of the global economy is being tested by escalating trade tensions and a heightened wave of uncertainty around the scope, timing, and intensity of tariffs.

While engendering heightened volatility in global financial markets, these have also caused apprehensions about the slowdown in global growth.

“Amidst these challenges, the Indian economy continues to demonstrate resilience as evident in the robust performance of the agriculture sector and improving consumption,” the article said.

The reverberations of a tumultuous external environment, however, are being reflected in sustained foreign portfolio outflows, it added.

The article further said high frequency indicators suggest that aggregate demand continued to remain resilient in Q4:2024-25.

“Activity indicators such as E-way bills and toll collections recorded double digit (y-o-y) growth in February 2025,” it said.

Also high frequency food price data for March so far (up to 17th) show an increase in cereal prices, both for rice and wheat. Edible oil prices have firmed up as well – mainly driven by palm, soybean and sunflower oil. Pulses prices, on the other hand, continued to show broad-based moderation.

Prices of key vegetables including potato, onion and tomato witnessed further correction.

According to the article, India's financial landscape is also navigating these external risks manifested through various channels while addressing domestic funding needs.

“The Reserve Bank has remained agile, swiftly tackling liquidity shortages triggered by government tax flow dynamics,currency leakages and foreign portfolio investor (FPI) outflows,” it said.

The RBI has deployed a strategic mix of interventions, including open market operations (OMO), daily variable rate repo (VRR) auctions, and dollar/rupee buy-sell swap auctions.

These proactive measures have helped stabilise market liquidity conditions, ensuring financial resilience in an unpredictable global environment, it said.

The RBI said the views expressed in the Bulletin article are of the authors and do not represent the views of the Reserve Bank of India.

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