Daijiworld Media Network - New Delhi

New Delhi, Jul 28: India’s economy has entered the second quarter of FY26 on a solid and stable footing, buoyed by resilient domestic supply-demand dynamics, controlled inflation, and favourable monsoon progress, according to the Finance Ministry’s Monthly Economic Review for June 2025, released on Monday.

The report notes that India continues to project the aura of "steady as she goes", maintaining momentum as one of the world’s fastest-growing major economies. With key forecasters such as S&P, ICRA, and the RBI’s Survey of Professional Forecasters projecting GDP growth of 6.2% to 6.5% for FY26, the outlook remains largely positive.

Strong domestic demand, fiscal prudence, and monetary policy support have helped preserve India’s macroeconomic stability. The country’s financial markets remain resilient, thanks largely to robust participation from domestic investors and a sound banking system. The Gross and Net Non-Performing Asset (GNPA and NNPA) ratios of scheduled commercial banks have dropped to multi-decade lows of 2.3% and 0.5%, respectively—an outcome of improved asset quality and strong earnings.

The first quarter of FY26 saw solid performance across key sectors:

• Services continued to grow robustly.
• Manufacturing and agriculture showed encouraging signs.
• A favourable southwest monsoon—arriving early with above-normal rainfall—boosted agricultural sentiment. Adequate fertiliser supply and reservoir levels further support strong kharif crop prospects and rising rural incomes.

A recent NABARD rural sentiment survey revealed that 74.7% of rural households expect their income to rise in the coming year, marking the highest optimism since the survey began.

However, the review strikes a tone of cautious optimism, flagging a few potential headwinds. These include:

• A 0.5% contraction in the US economy in Q1 2025, which could weaken demand for Indian exports.
• Uncertainty around US tariffs potentially affecting trade.
• Moderate credit growth and weak private investment appetite, which may limit near-term acceleration.

Looking ahead, the ministry notes that India will need to strategically position itself amid global supply chain realignments in sectors like semiconductors, rare earths, and magnets, to strengthen long-term economic prospects.

In summary, the review paints a picture of measured economic progress, backed by strong fundamentals but tempered by global and domestic uncertainties.