New Delhi: India's economy has demonstrated resilience amid global headwinds, supported by buoyant domestic demand, increased industrial activity and a recovery in the southwest monsoon that has helped mitigate risks to the agriculture sector, the Reserve Bank of India's latest monthly bulletin said on Tuesday.
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The central bank's August bulletin presented an optimistic assessment of the domestic economy even as the global economic outlook remains clouded by geopolitical tensions and trade-related uncertainties.
"The domestic economy has demonstrated notable resilience to the ongoing global headwinds, characterised by buoyant domestic demand and rising manufacturing and services activity," an article titled 'State of the Economy' said.
The southwest monsoon, which recorded a deficit in June, picked up in July, helping kharif sowing move closer to normal acreage.
"The recovery in southwest monsoon in July helped in kharif sowing reaching closer to normal acreage, partly mitigating some of the risks to the agriculture sector," the article said.
Improved rainfall also helped replenish water resources, with all-India reservoir storage reaching close to its decadal average and remaining higher than the preceding level.
On the inflation front, headline consumer price inflation rose marginally, driven by food inflation, while core inflation remained stable, according to the bulletin.
Liquidity conditions also eased, supporting credit growth and continued investment activity. Foreign capital inflows rebounded, strengthening the external sector.
The RBI article said India could be less affected by the additional 10% US tariffs than some other Asian economies, including China, Vietnam and Thailand.
It noted that several major Indian export commodities to the US, including smartphones, petroleum products and pharmaceuticals, remain outside the purview of the additional tariffs imposed under Section 301.
"India is likely to be less affected than some of the Asian economies in the US market, such as China, Vietnam and Thailand," the article said.
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Foreign direct investment flows into India also improved in June 2026 from the previous month, supported by higher gross inflows.
Singapore, the Netherlands, the US and Canada together accounted for around 74% of total equity inflows during the month.
Manufacturing attracted the largest share of equity inflows, followed by electricity generation, computer and communication services.
At the same time, outward FDI continued to decline for the second consecutive month. Around 65 percent of outward FDI flows were directed towards Singapore, the UAE and the US.
Financial, insurance and business services, manufacturing, wholesale and retail trade, restaurants and hotels were the major sectors accounting for outward FDI. Together, these sectors accounted for 74 percent of the total outward flows.
The RBI bulletin said the global economy continues to face a fragile geopolitical environment and persistent trade-related uncertainties. However, it said India's strong domestic demand, improving industrial activity, easing liquidity conditions and recovery in monsoon activity were supporting the economy.
The central bank clarified that the views expressed in the 'State of the Economy' article are those of its authors and do not represent the views of the Reserve Bank of India.
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