Indian ship steady despite turbulent global seas: RBI

• Despite global trade tensions and geopolitical instability, India’s economy continues to show strong momentum.

• Key drivers: Industrial and services sectors, strong domestic demand, and policy support.

• RBI warns that prolonged trade uncertainty and rising protectionism may have long-term effects on the global economy.

• Renewed geopolitical tensions in West Asia, including Israel-Iran conflict, could impact global trade and stability.

• May 2025 high-frequency data shows robust activity:

• GST revenue, e-way bills, toll collections, and digital payments saw strong growth.

• Agriculture showed good kharif sowing prospects, although monsoon uncertainty remains.

• Pulse prices moderated in June.

• Cereal prices rose slightly but remain manageable.

• Overall food inflation continues to ease.

• Foreign Direct Investment Up

• FDI inflows in April 2025 were $8.8 billion, up from:

• $5.9 billion in March 2025

• $7.2 billion in April 2024

• Major sectors: Manufacturing and business services

• Repo rate cut by 50 bps to 5.5% in June 2025 to stimulate:

• Private consumption

• Investment activity

• Retail inflation at a six-year low, driven by food price moderation.

• RBI sees room to focus on growth, as inflation is likely to stay below target this fiscal year.

• The RBI remains cautious, saying medium-term growth will be shaped by global developments.

• Trade policy shifts, especially the US tariff truce expiry in July, could affect global and Indian trade flows.