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Informist, Wednesday, May 21, 2025

--RBI paper: India-UK FTA points to strengthening bilateral trade linkages 

--CONTEXT: Remarks from RBI's monthly State of the Economy article 

--RBI paper: India well-positioned to navigate ongoing global headwinds 

 

NEW DELHI – The Indian economy remains resilient in the face of global headwinds, with growth driven by robust domestic consumption, increased government spending, and a strong services sector, the Reserve Bank of India staff said in the monthly State of the Economy article released Wednesday.

 

"Persistent trade frictions, heightened policy uncertainty, and weak consumer sentiment continue to create headwinds for global growth. Amidst these challenges, the Indian economy exhibited resilience," the staff paper said. "The Indian economy is exhibiting resilience despite the high trade and tariff-related uncertainty. "

 

The paper said various high-frequency indicators of the industrial and services sectors sustained their momentum in April. The RBI has projected India's GDP to grow 6.5% in the current financial year started in April.

 

The article, part of the RBI's monthly bulletin, does not represent the views of the central bank.

 

The central bank staff said that a bumper rabi harvest, higher acreage for summer crops, and favourable southwest monsoon forecasts for this year, all augur well for the agriculture sector. This will further improve consumption in India's rural areas and is also likely to keep food inflation in check, the paper said.

 

CPI inflation fell to 3.16% in April, the lowest since July 2019, as food inflation declined to a 42-month low of 1.78%. Prices of some vegetables have risen in May, but economists say headline CPI inflation could fall to near 3.0% this month.

 

The RBI staff said India is increasingly positioned to function as a "connector country" that can become a key intermediary in sectors such as technology, digital services and pharmaceuticals. "In this scenario, the recent completion of the free trade agreement with the UK points to a strengthening of bilateral trade linkages," the paper said.

 

India stands well-positioned to navigate the ongoing global headwinds with confidence, ready to "harness emerging opportunities and consolidate its role as a key driver of global growth", the paper said.  End

 

Reported by Shubham Rana

Edited by Saji George Titus

 

 

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