India Emerging as Global ‘Connector’ Economy, Resilient Despite External Shocks: RBI

India's economy is resilient amid global uncertainties, said the Reserve Bank of India (RBI) in its monthly bulletin released on late Wednesday. The bulletin stated that global growth continues to face several challenges due to ongoing trade tensions, policy uncertainty, and weak consumer sentiment.

"Persistent trade frictions, heightened policy uncertainty, and weak consumer sentiment continue to create headwinds for global growth. Amidst these challenges, the Indian economy exhibited resilience," the bulletin read.

"Various high-frequency indicators of the industrial and services sectors sustained their momentum in April. A bumper rabi harvest and higher acreage for summer crops, coupled with favourable southwest monsoon forecasts for 2025, augur well for the agriculture sector," it added.

The central bank noted that the outlook for the country is one of cautious optimism. It said that India is projected to surpass Japan this year and to become the world's fourth-largest economy.

The report also underlined that inflation pressure has eased significantly and is poised for a durable alignment with the target in 2025-26. Furthermore, The prospects of bumper rabi harvest and the outlook of an above normal monsoon expected to further strengthen rural consumption and is also likely to keep food inflation in check. The report noted that domestic financial markets were under pressure in April, but saw a turnaround beginning in the third week of May.

India’s economy remains anchored by a stable foundation—monetary, financial and political stability, consistent policies, a business-friendly environment, and solid macro fundamentals. With a transparent and forward-looking policy framework, India is well-placed amid global shifts in trade and industrial strategies.

As global supply chains realign, India is emerging as a vital “connector country”, especially in areas like technology, digital services, and pharmaceuticals. The recent free trade agreement with the UK is a sign of deepening trade ties, the central bank noted.