India's econ activity holds up, demand conditions robust: RBI Bulletin

The economy, supported by resilient domestic demand in the second quarter (Q2) of fiscal 2025-26 (FY26), grew at its fastest pace in the last six quarters.

“Headline CPI inflation edged up but continued to remain below the lower tolerance level. Financial conditions remained benign, and the flow of financial resources to the commercial sector remained robust,” the article titled ‘State of the Economy’ said.

Real gross domestic product (GDP) grew by 8.2 per cent in Q2 FY26—the highest since Q4 FY24—on the back of robust private consumption and fixed investment. The growth in private consumption was sustained by a robust rural demand and easing inflationary pressures. Net exports continued to be a drag on growth, it noted.

“Notwithstanding a sharp uptick in real GDP growth in Q2, the nominal GDP registered a four-quarter low growth of 8.7 per cent. The narrowing of the gap between nominal and real GDP growth reflected the moderation in the GDP deflator to a low of 0.5 per cent,” it said.

“The sharp increase in e-way bill transactions generation indicates a rise in goods movement and declined freight activity supported by the GST [goods and services tax] reforms,” they said.

Emphasising that the Indian economy was not fully immune to the external sector headwinds, the article said coordinated fiscal, monetary and regulatory policies had helped to build resilience over the year.

ALCHEMPro News Desk (DS)