Indian Economy Likely To Preserve Growth Momentum Despite Global Uncertainties

New Delhi: With easing inflation, resilient domestic demand, and continued policy momentum, the government said that India’s macroeconomic environment remains steady. Besides, the country's economy is expected to preserve the growth momentum for the rest of this financial year and navigate emerging risks amid global uncertainties, which can adversely affect exports, capital flows and investor sentiment, according to the the finance ministry's monthly economic review report for October released on Thursday.

The report came just a day before the release of second quarter GDP data which is scheduled to be out on November 28. However, the finance ministry said that independent economic assessments placing real GDP growth for the second quarter of this financial year (FY26) in the range of 7.0 to 7.5 per cent indicate continued strength in underlying economic activity.

"The overall macroeconomic environment remains stable, supported by easing inflation, resilient domestic demand, and continued policy momentum and the favourable effects of GST rationalisation are now increasingly visible in consumption-related indicators. Besides, sustained public capital expenditure and firming rural and urban demand are indicative of a resilient domestic economy," the review report said.

Compared with the global economy, the review also highlighted the elevated trade policy uncertainty in the external environment, but said that the government believes global pressures have moderated relative to earlier peaks. “While a series of trade agreements between the major economies has contributed to a reduction in this uncertainty, it still remains elevated due to the absence of clear, transparent and sustainable agreements among these partners,” the finance ministry said.

The report further highlighted that improving consumption trends, healthy corporate balance sheets and strong participation in domestic financial markets continue to underpin economic activity. “The inflation outlook remains encouraging, supported by softening global commodity prices, benign energy markets and targeted domestic supply interventions. However, the balance of risks warrants continued vigilance,” the review said.

On public investment, the ministry also pointed out that it continues to play a critical stabilising role. "The government’s sustained focus on infrastructure spending and capital expenditure has provided a counterbalance to weaker external demand, ensuring that domestic economic engines keep running. Corporate India, too, appears financially healthy, with companies maintaining stable balance sheets and showing early signs of earnings recovery after a relatively muted period," the report said.