In its June 2025 edition, the Reserve Bank of India (RBI) Bulletin highlighted the strength of the Indian economy amid a turbulent global backdrop. Despite rising global tensions and policy uncertainties, the Indian economy has demonstrated remarkable resilience, with multiple high-frequency indicators showcasing robust activity in both industrial and services sectors.

Global Economic Challenges Persist

The global economy continues to face severe headwinds. Trade policy disruptions, geopolitical tensions—particularly in key conflict zones—and inflationary pressures have created a challenging environment for nations worldwide. The RBI bulletin notes that these twin shocks have kept global markets volatile and investor sentiment cautious. These external shocks have had ripple effects across economies, slowing down trade, investment flows, and growth in several parts of the world.

India’s Stable Growth Trajectory

Amid this volatile global landscape, India stands out as a beacon of economic stability. The RBI report states that India’s macroeconomic fundamentals remain strong, supported by prudent fiscal and monetary policies, healthy domestic demand, and robust structural reforms. These factors have helped cushion the Indian economy from the full impact of global disruptions.

High-Frequency Indicators Signal Positive Trends

The bulletin emphasizes that several high-frequency indicators for May 2025 point toward sustained economic momentum. These include:

  • Industrial production: Showing consistent year-on-year growth.

  • GST collections: Remaining well above ₹1.5 lakh crore for the fifth consecutive month, signaling strong domestic consumption.

  • Electricity consumption: A key proxy for industrial and residential activity, has seen an upward trend.

  • Passenger vehicle sales and two-wheeler sales: Reflect growing consumer confidence and rural demand.

  • E-way bills and FASTag collections: Indicate healthy freight movement and infrastructure usage.

These indicators, taken together, underline the resilience and recovery strength of the Indian economy despite the global slowdown.

Sector-Wise Economic Outlook

1. Industrial Sector

The manufacturing sector has continued to expand, driven by government initiatives like Production Linked Incentive (PLI) schemes and a renewed push towards Make in India. Strong performances in core sectors such as steel, cement, and chemicals have further fueled industrial momentum. The Purchasing Managers’ Index (PMI) for manufacturing remained in the expansion zone, highlighting steady business optimism.

2. Services Sector

The services sector, which contributes over 50% to the country’s GDP, has also been performing well. Strong demand in areas like financial services, travel and tourism, hospitality, and IT services has supported this growth. The Services PMI for May 2025 stood at a multi-month high, showcasing broad-based expansion and job creation in the sector.

Consumer Confidence and Rural Economy

India’s consumer confidence index has shown a positive uptick, supported by rising incomes, easing inflation, and better job prospects. The rural economy, which had shown signs of stress earlier, is now witnessing improvement due to a better-than-expected rabi harvest, increased government support through direct benefit transfers, and rural employment schemes.