Amidst growing global economic uncertainty, the Indian economy continues to demonstrate resilience as is evident in the robust performance of the agriculture sector and improving consumption, according to the RBI’s latest monthly bulletin.

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, the bulletin states.

The reverberations of a tumultuous external environment, however, are being reflected in sustained foreign portfolio outflows. 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 report points out.

The bulletin highlights that India’s macroeconomic fundamentals remain strong, and economic growth is poised to sustain momentum driven by robust domestic demand, steady investment activity, and ongoing government spending on infrastructure development.

Private consumption expenditure is on an upward trajectory, signalling strong consumer confidence and sustained demand. Government spending has picked up significantly in recent months, providing a further fillip to growth. Key sectors, including construction, financial services, and trade, continue to thrive as pillars of economic resilience, the report observes.

It states that various high-frequency indicators of economic activity point towards a sustained momentum in growth during Q4 as well. The first revised estimates of GDP for 2023-24 placed the real GDP growth at 9.2 per cent -- the highest in over a decade if we exclude the post-Covid rebound -- demonstrating that in an uncertain world, India’s growth story remains a beacon of stability and progress.

Recent developments across different sectors reaffirm the assessment of a sequential pick-up in growth momentum. The Kharif season 2024-25 has seen an upward revision in production estimates for foodgrains and oilseeds and rabi foodgrains registered a growth of 2.8 per cent mainly on account of above-normal rainfall supported by comfortable reservoir levels.

Despite a mild loss in momentum, the Indian manufacturing sector saw a rise in purchasing activity and employment in February 2025. The services sector recorded a strong expansion in new businesses and employment, according to the bulletin.

Notwithstanding the innate strength built on strong macroeconomic fundamentals and prudent policy, the reverberations of a tumultuous external environment are also reflected in various segments of the economy. Sustained foreign portfolio outflows exerted significant pressures on domestic equity markets in February and engendered currency depreciation, the bulletin added.