The Reserve Bank of India (RBI) said the economy remains resilient despite rising risks from the war in Iran and a weak monsoon, according to its July 2026 State of the Economy report. The central bank noted that domestic activity is holding firm, supported by improving rural demand, robust urban consumption, and resilient industrial and services sectors. High-frequency indicators, it added, continue to signal solid underlying momentum.
Headline consumer inflation inched higher in June, driven by increases in food and fuel prices, though core inflation was unchanged. Wholesale inflation also picked up. The RBI cautioned that elevated oil prices and an uneven monsoon— which has delayed the sowing of key crops—could darken the outlook.
Even so, the central bank maintained its forecast for economic growth at 6.6% for the fiscal year ending March 2027 and projected average inflation at 5.1%. Governor Sanjay Malhotra said inflation pressures are “largely supply-side” and added that it is “premature to discuss monetary tightening.”
