“State of the Economy” : RBI
The Reserve Bank of India’s article titled “State of the Economy” offers a cautiously optimistic view of the Indian economy, amid global and trade-related uncertainties.
- Retail inflation (measured by the Consumer Price Index (CPI) fell from 5.4% in 2023–24 to 2.1% in June 2025, the lowest since January 2019.
- In June 2025, core inflationrose to 4.4% due to costlier personal care, education, and recreation, while overall inflation eased more sharply in rural (1.7%) than urban areas (2.6%).
- India recorded a current account surplus of 1.3% of Gross Domestic Product (GDP) in Q4 2024–25.
- India’s Current Account Deficit narrowed to 0.7% of GDP in FY24.
- Gross fiscal deficit (GFD) stood at 0.8% of its 2025-26 budget estimates, a significant improvement from 3.1% in 2024-25
- Till May 2025, the Centre received 21% of Budget Estimates (BE) 2025-26 of Total Receipts. Total expenditure stood at 14.7% of FY26 BE, with a notable focus on capital expenditure.
- India’s overall trade deficit narrowed nearly 30% in May 2025, mainly due to falling oil prices and strong services exports.
- Compared to May 2024, total exports in May 2025 grew by 2.8% boosted by a 9.4% rise in services exports, while total imports fell by 1%.
- India’s export performance in FY 2024–25 was driven by strong growth in sectors like coffee, tobacco, electronic goods, rice, and drugs & pharmaceuticals.
- Other sectors such as ready-made garments (RMG) of textiles, plastic & linoleum, engineering goods, and fruits & vegetables also saw positive growth.
- The US, UK, Japan, UAE, and France emerged as top export destinations during the year.
- On the import front, major sources included UAE, China, Thailand, US, and Russia.
- FDI inflows up 14% in FY25 from FY24, and 125% higher than FY14.
- The services sector led with 19% of equity inflows, followed by software & hardware (16%) and trading (8%).
- Manufacturing FDI rose by 18% in FY25 compared to FY24, Maharashtra topped with 39% of inflows, while Singapore was the largest source (30%), followed by Mauritius and the US.
- India witnessed positive net Foreign Portfolio Investment (FPI) inflows of USD 44.1 billion in FY24.
- India’s external debt rose by 10% in 2025 compared to 2024, with the debt-to-GDP ratio rose slightly to 19.1% from 18.5% FY24.
- India’s foreign exchange reserves stood at USD 696 billion as of July 2025, covering over 11 months of goods imports and 95% of external debt.
