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Informist, Monday, Nov. 24, 2025

 

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--RBI Paper: Fisc, monetary, regulatory steps to aid long-term econ resilience 
--RBI Paper: Fisc, monetary, regulatory steps pave way for higher pvt invest 
--RBI Paper: External sector's capacity to absorb shocks improved over time 
--RBI Paper: Concerns persist about high exuberance in global equity mkts 
--RBI Paper: Econ showed further pick up in momentum despite global headwind 
--RBI Paper: Fincl conditions benign, flow of improved from year ago 
--RBI Paper: Global uncertainty remains elevated

 

NEW DELHI – Global uncertainty remains elevated, although October witnessed a slight pullback after more than a year of continuous increase, according to the Reserve Bank of India's staff. "World trade and policy uncertainties also retreated," the central bank's staff said in the monthly State of the Economy article released Monday.

 

The Indian economy showed signs of a further pick up in momentum, despite lingering external sector headwinds, with demand conditions showing signs of improvement due to revival of urban demand and continued strength in rural demand, the staff said in the article, which is part of the RBI's monthly bulletin. Comments in the article do not represent the views of the central bank.  

 

"In the midst of continuing uncertainty on global trade policies and concerns about their domestic impact, Indian economy continues to be resilient to external sector shocks, backed by strong services exports, robust remittance receipts, and benign oil prices," the staff said. Foreign exchange reserves remain adequate to cushion adverse external shocks, external debt as a proportion of GDP remains low and stable, and the share of short-term debt in total external debt remains low, they added.

 

The central bank staff's confidence in the momentum of the Indian economy comes days before the government details the GDP growth figure for the September quarter on Friday. India's real GDP growth was 7.8% and nominal GDP growth was 8.8% in the June quarter. Growth momentum is under the scanner because of the 50% tariff imposed by the US on Indian exports, New Delhi's top export destination. The 50% tariff on India is one of the highest in the world, even as New Delhi and Washington are working on a bilateral trade agreement.

 

"The external sector's capacity to absorb shocks has also improved over time, building resilience amid global trade policy uncertainties," according to the paper. Improved macroeconomic frameworks and outcomes have not only enhanced the ability of financial institutions to support the macroeconomy but also allowed RBI to better calibrate regulatory measures, to improve the efficiency of financial intermediation and augment the flow of credit to the broader economy, it added. 

 

The central bank's Monetary Policy Committee has lowered the repo rate by 100 basis points so far this year to 5.50% to support growth, especially as it drew comfort from benign inflation. According to the central bank's staff, the fiscal, monetary, and regulatory measures undertaken so far this year should pave the way for a virtuous cycle of higher private investment, productivity, and growth, leading to long-term economic resilience.

 

The Union government first announced the income tax relief in the Budget for 2025-26 (Apr-Mar) to aid disposible income in the hands of taxpayers which can then be channelised into the economy in the form of investments. The GST Council also gave relief on the indirect taxes side, lowering goods and services tax on a slew of items. Both these measures were to spur consumption demand and thereby boost private investments. 

 

Over the last few years, the government has undertaken many steps to boost private investments but they continue to be sluggish with India's GDP growth being still largely driven by the government spending. 

 

The central bank's staff also said global financial market volatility, which had moderated in October, resurged in November due to concerns over "stretched valuations in AI (artificial intelligence company) stocks". In this context, concerns persist about the heightened exuberance in global equity markets, raising questions about its sustainability and the financial stability implications of any sharp correction, they said.  End

 

Reported by Priyasmita Dutta

Edited by Akul Nishant Akhoury

 

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