Mint Quick Edit | India’s economy: The case for cautious optimism
The Indian economy has proven quite resilient so far in the face of global turbulence, although some adversities persist. Looking ahead, we can’t afford to let our guard down on price threats.
As uncertainty hangs heavy over the global economy, countries the world over are striving hard to keep their economies shielded.
In this backdrop, it is encouraging that India seems to be weathering the storm well, going by an article written by multiple authors on the state of India’s economy and published by the Reserve Bank of India (RBI) in its monthly bulletin.
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Various high frequency indicators, it says, showed resilience in May across industrial and service sectors, even as inflation stayed below RBI’s 4% target for four straight months.
That said, corporate results reveal a less sanguine picture, with revenues of listed private non-financial companies growing slower in the last quarter of 2024-25. Profitability increased, though. This suggests efficiency-driving and cost-cutting measures amid weak demand conditions.
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With global trade turmoil yet to show in Indian prices, we should keep a watch on any uptick in the cost of living. While RBI has turned its focus to growth support by slashing its policy rate by half-a-percentage-point this month, a sharper than expected price incline could upset its calculus. Other central banks have taken a cautious approach. We should stay vigilant too.
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