Is India’s Economic Growth on Course Despite Global Uncertainties?

New Delhi, July 11 (NationPress) India’s economic growth trajectory appears stable in the face of global uncertainties, as indicated by a recent report from the Bank of Baroda (BoB) released on Friday. The report highlights improvements in high-frequency indicators for both the services and manufacturing sectors, along with a notable uptick in consumption during Q1 FY26 compared to Q4 FY25.

Preliminary data for the first quarter (Q1) indicates that consumption demand is on the rise compared to the previous quarter. This is evident from the increased growth in steel consumption, a surge in electronic imports, and heightened central government revenue spending, as reported by BoB.

Indicators for services also show a resurgence in activity, reflected in metrics such as services PMI, vehicle registrations, diesel consumption, state revenue collections, and e-way bill generations.

However, challenges persist, particularly in the performance of two-wheeler sales, along with a slowdown in consumer durables and FMCG output. Despite these challenges, domestic inflation trends remain favorable, suggesting a potential for a softer monetary policy that could stimulate growth, according to the report.

Additionally, the report notes that monsoon conditions are robust, currently at 15% above the long-term average as of July 9, which is anticipated to benefit the agricultural sector.

Furthermore, the Central government’s financial position is solid, with the fiscal deficit ratio decreasing to 4.5% as of May 2025 from 4.6% in April 2025.

The outlook for the rupee is also optimistic, with a marginal depreciation of 0.2% in June following a 1.3% dip in May. Easing geopolitical tensions and a weaker dollar have contributed to stabilized trading of the domestic currency in the latter part of June.

“In July, the rupee is showing signs of appreciation despite ongoing concerns regarding US tariff policies. We anticipate this trend will persist. Investors are optimistic about the potential completion of the India-US trade deal before the August 1 deadline, which could further bolster the rupee,” the report states.

On a global scale, tariff apprehensions are clouding growth-inflation dynamics. The anticipation of new commodity-specific and country-specific tariffs has reignited inflationary concerns. Recent Fed minutes have also pointed out these issues as obstacles to easing monetary policy. Given the murky global environment, domestic markets may experience some volatility, the report concludes.