The Indian economy has navigated the external uncertainties well in Q1 FY27, underpinned by healthy demand conditions and resilient performance of the industrial and services sector, an article in the latest RBI Bulletin said.
Liquidity conditions improved further, supporting the ongoing robust credit growth.
External vulnerability indicators also remained sound.
Core inflation remained low in June.
Headline retail inflation inched up in June while core inflation remained low—3.9 per cent year on year (YoY) in June 2026.
Liquidity conditions improved further, supporting the ongoing robust credit growth. India’s external sector remains steady with improving outlook, aided by inflows of foreign investments, the article on the state of the domestic economy noted.
The momentum of external trade sustained as reflected in high growth in exports and imports in Q1 FY27. This is likely to be strengthened by the recent operationalisation of the India-UK Comprehensive Economic and Trade Agreement and progress in other bilateral trade agreements.
External vulnerability indicators also remained sound. Recovery of foreign investments in recent months shows a revival of confidence in the economy, the article said.
Domestic demand was supported by a sharp pick-up in rural demand in June. Urban demand also remained firm.
In June, the all-India unemployment rate remained stable with a decline in rural unemployment rate, while the urban unemployment rate ticked up.
The labour force participation rate and worker-population ratio also remained unchanged as compared to previous month in rural areas, whereas they increased marginally in urban areas.
Merchandise exports recovered in Q1 FY27 from a contraction in the corresponding quarter of the previous fiscal. Imports also grew at double digit. However, the merchandise trade deficit stood higher YoY in the quarter, widened to a five-month high in June.
Till June 2026, both exports and imports recorded a strong growth for the third consecutive month.
There has been a very high growth (triple-digit) in imports from countries such as Oman, Brazil, and Nigeria, reflecting India’s recent initiatives to diversify the source of petroleum.
Fibre2Fashion News Desk (DS)
