The Reserve Bank of India has expressed confidence that fiscal, monetary and regulatory measures are creating conditions for a sustainable cycle of private investment-led growth, even as global trade uncertainties continue to pose challenges. The central bank's assessment came in its November Bulletin released on Monday.
Domestic Economy Shows Resilient Growth
According to the State of the Economy article in the bulletin, India's economy demonstrated signs of accelerated momentum during October, driven by robust festive-season demand and the continuing positive effects of GST reforms. The report highlighted that high-frequency indicators pointed to strong expansion across both manufacturing and services sectors.
In a significant development, inflation has moderated to historic lows and remains comfortably below the target range. Financial conditions have stayed favorable, with the flow of financial resources to the commercial sector showing a sharp increase compared to the previous year.
The bulletin noted that India is building greater resilience against external shocks through strong services exports, steady remittance flows, and reduced adverse impact of oil prices on the current account. Key external vulnerability indicators showed improvement as of June-end compared to March-end 2025, while the current account deficit remained modest during the first quarter of fiscal year 2026.
Foreign Investment Trends and Currency Movements
Foreign Direct Investment data revealed that FDI inflows during April-September 2025 exceeded the same period last year on both gross and net bases. September maintained robust gross inward flows, with Singapore, Mauritius, the UAE, Luxembourg and Qatar collectively accounting for 78 percent of total inflows.
The major recipient sectors for foreign investment included manufacturing, retail and wholesale trade, communication services, financial services and computer services. However, the report noted that net FDI turned negative for the second consecutive month due to increased outward FDI and repatriation activities.
Rupee Performance and Forex Operations
On the currency front, the Indian rupee experienced slight depreciation against the US dollar in October, primarily influenced by the stronger greenback following the Federal Reserve's policy announcement. The currency briefly appreciated in mid-October amid optimism surrounding India-US trade talks and renewed foreign portfolio investor inflows.
Between November 1 and 21, the rupee appreciated by 0.1 percent compared to its October-end level. The RBI data showed that the central bank net sold USD 7.91 billion in September to manage pressure on the rupee. In the onshore and offshore OTC markets, the RBI sold USD 10.11 billion while purchasing USD 2.2 billion during the same month.
The central bank emphasized that the views expressed in the article represent the authors' perspectives and not the official position of the RBI. Despite global uncertainties and concerns about potential exuberance in equity markets, India's domestic economic momentum continues to hold firm, positioning the country for sustained growth in the coming months.
