In its month-to-month financial evaluate, the ministry mentioned the primary quarter of fiscal 2025-26 (FY26) presents an image of resilient home provide and demand fundamentals.
With inflation remaining inside the goal vary and monsoon progress on observe, the home economic system enters the second quarter of FY26 on a comparatively agency footing.
Whereas geopolitical tensions haven't elevated additional, the worldwide slowdown, significantly within the US (which shrank by 0.5 per cent in Q1 2025), may dampen additional demand for Indian exports.
“Continued uncertainty on the US tariff entrance might weigh on India's commerce efficiency within the coming quarters. Sluggish credit score development and personal funding urge for food might prohibit acceleration in financial momentum,” it mentioned.
Additional, given the deflationary pattern within the wholesale value index, one has to look at financial momentum in nominal portions. Measured in fixed costs, financial exercise might seem more healthy than it's, the evaluate report mentioned. “All that mentioned, the economic system has the feel and appear of ‘regular as she goes' so far as FY26 is worried,” it mentioned. The report famous regardless of financial easing and a robust financial institution stability sheet, credit score development has slowed, reflecting cautious borrower sentiment and presumably risk-averse lender behaviour.
“A rising choice for bond markets, significantly industrial papers amongst corporates on account of decrease borrowing prices, can also clarify the shift,” it mentioned.
Piggybacking on initiatives just like the Employment Linked Incentive (ELI) scheme, the ministry mentioned it's time for corporates to set the ball in movement.
The Reserve Financial institution has cumulatively diminished the short-term lending charge (repo) by 100 foundation factors since February.
With an outlay of Rs 99,446 crore, the ELI scheme goals to incentivise the creation of greater than 3.5 crore jobs within the nation over a interval of two years, with particular deal with the manufacturing sector.
The report mentioned that regardless of world headwinds marked by commerce tensions, geopolitical volatility, and exterior uncertainties, India's macroeconomic fundamentals have remained resilient.
Aided by strong home demand, fiscal prudence and financial assist, India seems poised to proceed as one of many fastest-growing main economies, with varied forecasters, together with S&P, ICRA, and the RBI's Survey of Skilled Forecasters, projecting GDP development charges for FY26 within the vary of 6.2 per cent and 6.5 per cent, it mentioned.
The report mentioned high-frequency indicators mirrored broad-based power, registering sturdy year-on-year development.
Whereas the manufacturing and building sectors continued to broaden, the providers sector anchored the general financial development in Q1 of FY26.
As of now, beneficial progress within the southwest monsoon has bolstered agricultural exercise, resulting in greater kharif sowing in comparison with the earlier yr.
Satisfactory fertiliser availability and cozy reservoir ranges augur nicely for a wholesome harvest outlook, offering contemporary impetus to rural incomes and consumption, the ministry mentioned.
