New Delhi: India’s economy showed resilience in the early months of FY27, though risks from uneven monsoon rainfall, emerging El Niño conditions and geopolitical uncertainties persist, according to the finance ministry’s monthly economic review.
The June 2026 report by the department of economic affairs noted that high-frequency indicators including e-way bills, PMI readings, electricity use and vehicle sales pointed to solid domestic demand after strong growth in 2025-26.
“Overall, the economy continues to exhibit resilience. However, moderation in select high-frequency indicators suggests some easing in momentum,” the report said.
Uneven monsoon distribution, El Niño risks and geopolitical tensions are expected to influence the outlook. Although global energy prices have declined, potential disruptions in oil output and shipping via the Strait of Hormuz could still affect supplies and prices.
Moderation appeared in core industries, fuel use, air travel, consumer confidence and labour data, indicating easing momentum.
Inflation is likely to stay contained due to softer global commodity and crude prices plus lower input costs such as urea. Adequate buffer stocks and supply measures should help limit price pressures.
Industrial activity remained supported by reforms and investment. Updated IIP and WPI methods should improve tracking, while capital goods and infrastructure growth signal ongoing investment. Advances in manufacturing, digital infrastructure and critical minerals are set to boost competitiveness.
The West Asia conflict highlighted the need for buffer stock policies on key raw materials. Focus now shifts to monsoon shortfalls. Rains are forecast to improve in July and August, yet rainfall patterns are becoming less predictable.
Water conservation, recycling and Jal Jeevan Mission funds may rise on the policy agenda. The report urged changes to agricultural pricing to promote climate-resilient crops and reduce water-intensive farming.
Strong exports, steady FDI inflows and ample foreign reserves continue to provide external support. Lower crude prices from easing tensions and US-Iran talks have reduced pressures. Trade deals should further aid exports and capital inflows.
Prolonged conflict tested resilience, but policy responses helped maintain stability. External concerns are easing, foreign debt investors have returned, and equity flows may recover amid global market worries.
