RBI’s ‘State of the Economy’ Report

RBI’s ‘State of the Economy’ Report: The Reserve Bank of India (RBI) released its ‘State of the Economy’ report, projecting a growth rate of 6.7% in 2025-26 and highlighting robust domestic demand as a key driver of economic momentum despite global trade tensions.

• Key highlights of the Report: The Indian economy shows resilience with robust agriculture performance and improving consumption despite global challenges.

o Domestic demand, steady investment activity, policy-driven infrastructure development, and increased government spending are key growth drivers.

• Structural Strengths: Sound fiscal policies, a well-calibrated monetary framework, and digital transformation initiatives provide a strong foundation for long-term economic growth.
• Inflation and Trade Tensions: Headline CPI inflation declined to a seven-month low of 3.6% in February 2025 due to food price correction.
• External Sector: India’s external sector is supported by resilient services exports that remain less affected by global disruptions.
• Food Inflation Outlook: Commodity price volatility and weather anomalies remain potential upside risks.
• About Reserve Bank of India (RBI): It is the central bank and regulatory authority overseeing the Indian banking system. It manages the issuance, control, and supply of the Indian rupee.

  o Established in 1934 under the Reserve Bank of India Act, the RBI was formed based on the recommendations of the 1926 Royal Commission on Indian Currency and Finance, also known as the Hilton Young Commission.

  o Initially privately owned, the RBI was nationalized in 1949 and has since been under the ownership of the Ministry of Finance, Government of India.