The Indian economy continues to remain on a stable and high-growth trajectory in FY26, supported by strong domestic demand, sustained public capital expenditure, and well-anchored inflation expectations, according to the Finance Ministry’s Monthly Economic Review released on Thursday.
The Ministry highlighted that the combination of easing inflation, firming rural and urban demand, and continued policy momentum has placed the economy on a resilient footing, enabling it to navigate emerging global risks while preserving growth momentum for the remainder of the fiscal year.
The macroeconomic environment remains stable, backed by resilient consumption patterns and sustained government spending. The positive effects of GST rationalisation are becoming more visible in consumption indicators, while robust agricultural performance, evident through strong Rabi sowing and adequate reservoir levels, has further strengthened the outlook for food supply and rural incomes.
Corporate sector performance continues to remain healthy with sustained profitability and stable balance sheets. Domestic financial markets have maintained strength due to firm institutional participation. However, the external sector remains influenced by global uncertainties, though the steady performance of services exports has helped counterbalance volatility in merchandise trade.
Inflation trends remain encouraging. Retail inflation dropped to an all-time low of 0.25 per cent in October 2025, down from 1.44 per cent in September. This decline has been primarily driven by reduced GST rates, favourable base effects, and significant easing in food inflation. Food prices recorded a sharp deflation of 5 per cent — the steepest drop in over a decade — led by a fall in vegetable and pulse prices.
Core inflation remained steady at 4.3 per cent, reflecting stable demand conditions. Overall inflation during April-October 2025 stood at 4.8 per cent, indicating a consistent easing of price pressures.
Acknowledging these positive trends, the Monetary Policy Committee (MPC) has revised its inflation projection for FY2025-26 to 2.6 per cent, expressing confidence that inflation will remain well-anchored, provided normal weather patterns and stable supply conditions persist.
While global headwinds such as geopolitical tensions, trade policy shifts, and financial market volatility may pose challenges, the Finance Ministry noted that India’s economy is well-positioned to withstand these pressures and continue its upward growth trajectory.
