Economic policy measures to pave way for investment-led growth: RBI Bulletin

Mumbai, Nov 24 (PTI) Fiscal and monetary measures will pave the way for a virtuous cycle of higher private investment-led growth amid global trade policy uncertainties and external sector headwinds, the RBI Bulletin said on Monday.

An article published in the November Bulletin flagged that global uncertainty remains elevated.

Concerns persist about the heightened exuberance in global equity markets, raising questions about its sustainability and implications for financial stability, it said.

"The Indian economy showed signs of a further pick-up in momentum, despite continuing global headwinds. Available high-frequency indicators for October suggest a robust expansion in both manufacturing and services activities, supported by festive season demand and the ongoing positive impact of the GST reforms," said the article on 'State of the Economy'.

It also noted that inflation has moderated to a historic low and remained well below the target rate. Financial conditions remained benign, and the flow of financial resources to the commercial sector increased significantly from the year-ago level.

Amid global trade policy uncertainties and external sector headwinds, India’s economy is turning out to be "more resilient to external shocks over time", backed by strong services exports, remittances receipts and oil prices becoming less detrimental to the current account sustainability.

The increasing share of renewables in India’s energy mix is adding further resilience, the article said, adding that key external vulnerability indicators improved as of June-end from their levels at March-end 2025.

The current account deficit to GDP ratio remained modest in Q1 2025-26.

Improved macroeconomic frameworks and outcomes have not only enhanced the ability of financial institutions to support the macroeconomy but also allowed the Reserve Bank to better calibrate regulatory measures to improve the efficiency of financial intermediation and augment the flow of credit to the broader economy, it said.

"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 article said.

The article further said that during April-September 2025, FDI was higher than the same period last year on both gross and net basis.

Gross inward FDI remained robust in September, with Singapore, Mauritius, the UAE, Luxembourg, and Qatar together accounting for about 78 per cent of total inflows. The major recipient sectors were manufacturing, retail and wholesale trade, communication services, financial services and computer services.

"However, net FDI turned negative for the second consecutive month due to a rise in outward FDI and repatriation," according to the article.

On the foreign exchange market, it said the rupee (INR) depreciated slightly against the US dollar in October, reflecting the impact of a stronger greenback, following the US Fed’s policy announcement around the month-end.

In mid-October, however, the rupee registered a brief but sharp appreciation, supported by optimism over India-US trade talks and renewed net FPI inflows. Consequently, the rupee volatility increased marginally during the month, although it remained relatively contained compared with most major currencies.

In November so far (up to 21st), the rupee appreciated slightly by 0.1 per cent over its October-end level.

According to data provided in the Bulletin, the Reserve Bank net sold USD 7.91 billion in the forex market in September to arrest the rupee slide against the greenback.

According to the data on operations in the onshore/offshore OTC segment, the RBI sold USD 10.11 billion and purchased USD 2.2 billion in September.

The central bank, however, said the views expressed in the 'State of the Economy' article published in the Bulletin are those of the authors and do not represent the views of the Reserve Bank of India. PTI NKD CS NKD BAL BAL