New Delhi: India continues to be one of the fastest-growing major economies in the world despite persistent global uncertainties, the Reserve Bank of India (RBI) said in its July Bulletin released on Thursday. The central bank noted that the country’s economic momentum remained strong through June, driven by resilient domestic demand, robust industrial and services sector performance, healthy external trade and improving foreign investment inflows.
According to the RBI, while the global economy continues to face challenges from supply chain disruptions, geopolitical tensions and fragmented trade relations, India has managed to sustain growth with stable macroeconomic fundamentals and strong domestic economic activity.
Domestic demand, industry and services keep growth momentum intact
The RBI said economic activity remained resilient through June, with both the industrial and services sectors maintaining steady growth.
The central bank observed that strong domestic demand has helped the economy withstand external shocks. Improved liquidity conditions have also supported robust credit growth, while India’s external sector continues to remain stable with an improving outlook.
Although the southwest monsoon has been uneven in several regions, the RBI said the impact on food inflation is expected to remain limited due to comfortable foodgrain stocks, ensuring adequate supply.
Trade outlook improves with India-UK agreement and rising exports
The RBI highlighted that India’s external trade maintained strong momentum during the first quarter of FY2026-27, with healthy growth in both exports and imports.
The central bank said the recent operationalisation of the India–UK Comprehensive Economic and Trade Agreement (CETA) is expected to further strengthen trade prospects. Progress in other bilateral trade agreements is also likely to provide additional support to India’s export sector in the coming months.
The bulletin further noted that India’s external vulnerability indicators remain well within comfortable levels, reflecting the country’s resilience against global financial and economic shocks.
Foreign investment inflows signal renewed investor confidence
According to the RBI, both gross and net Foreign Direct Investment (FDI) during April-May 2026 were higher than the corresponding period last year.
The central bank also noted that Foreign Portfolio Investment (FPI) flows turned positive in June and continued to remain positive in July, supported by policy measures and easing geopolitical tensions.
The RBI said the recovery in foreign investment inflows reflects renewed investor confidence in the Indian economy.
Indian equity markets posted gains in June. However, the RBI observed that markets have remained largely range-bound since early July following renewed geopolitical developments and the end of a ceasefire in an international conflict.
Inflation remains under control despite slight rise in June
The RBI stated that headline retail inflation increased marginally in June, while core inflation, excluding precious metals, remained subdued.
The central bank said improving liquidity, healthy credit growth, stable external accounts and rising investment inflows continue to strengthen India’s macroeconomic outlook despite uncertainty in the global economy.
The July Bulletin concludes that India’s strong domestic fundamentals, resilient demand, stable financial system and expanding trade partnerships position the country to remain among the world’s fastest-growing major economies.