Indian Economy Strengthened by Robust Fundamentals and Policy Interventions, Says RBI Bulletin
The RBIs October bulletin highlights Indias economic resilience amid global uncertainties, driven by strong fundamentals and policy measures.
New Delhi, October 23 (Daily Kiran) : The Indian economy has demonstrated resilience amid global uncertainties, bolstered by strong macroeconomic fundamentals and effective policy interventions, according to the Reserve Bank of India’s (RBI) October 2026 monthly bulletin.
The central bank noted that high-frequency indicators from the industrial and service sectors indicate a consistent performance in the domestic economy. Despite being a net importer of energy, India’s GDP growth has been sustained by robust domestic demand and a thriving service sector.
The bulletin highlighted a slight increase in retail inflation over recent months, with signs of broader inflation across various goods. It emphasized the need for adjustments in monetary policy in response to these developments. In addition, the RBI has implemented several regulatory measures to curb speculative activities in the foreign exchange market, addressing external challenges effectively.
According to the bulletin, strong capital inflows under the FCNR(B) swap facility have contributed to an increase in foreign exchange reserves. In August, there was a notable rise in foreign direct investment (FDI), external commercial borrowing (ECB), and remittances. This strengthened export performance helped reduce the trade deficit in September.
The monthly report indicated that the Consumer Price Index (CPI)-based retail inflation rose in September, driven by significant increases in food, fuel, and core inflation components.
The RBI stated that double-digit growth in goods exports during the first half of the fiscal year 2026-27 has aided in reducing the trade deficit. Furthermore, the bulletin reported a robust flow of FDI, ECB, and remittances in August, along with increased foreign exchange reserves due to strong capital inflows.
On the supply side, the manufacturing sector has shown strong growth momentum, while both domestic and foreign demand have bolstered activities in the service sector. Despite challenges from the southwest monsoon and uneven distribution, the sowing of Kharif crops has been completed, with total sowing areas exceeding normal levels.
As of early October, the Indian rupee has strengthened after facing pressure, supported by the RBI’s measures to curb speculative activities in the foreign exchange market.
During the period from April to August 2026, there was a notable increase in external commercial borrowing activities, with improvements in both registration and net capital flows compared to the previous year. The bulletin indicated that sufficient foreign exchange reserves have helped maintain control over indicators related to external sector sensitivity.
The Indian economy has effectively weathered global shocks. The International Monetary Fund (IMF) has revised its growth forecast for India in the fiscal year 2026-27, increasing it by 60 basis points to 7 percent from its previous estimate in July. The IMF attributed this upgrade to better-than-expected economic momentum, strong domestic demand, and robust activities in the service sector.
