In its latest Monthly Economic Review, the Finance Ministry has flagged three risks for the Indian economy which are from uneven monsoon rainfall, emerging El Nino conditions and geopolitical uncertainties.
The economy remains resilient, though moderation in some high-frequency indicators suggests a gradual easing of momentum, a Finance Ministry report said, while flagging risks from uneven monsoon rainfall, emerging El Nino conditions and geopolitical uncertainties.
“High-frequency indicators such as e-way bill generation, PMI indices, electricity consumption, and automobile sales continued to reflect underlying strength in domestic economic activity. At the same time, moderation in select indicators, including core industries, fuel consumption, air passenger traffic, consumer confidence, and labour market indicators, suggests some easing in momentum,” it said.
Following the robust growth performance in 2025-26, economic activity remained resilient in the initial months of 2026-27, the finance ministry said.
On the inflationary pressures, the report said recent easing in global commodity markets, a correction in crude oil prices, and softening of key input prices, such as urea, may help moderate imported inflationary pressures.
The normalisation of global supply chains and trade flows to pre-conflict levels may take time, it said.
“Government interventions, adequate buffer stocks of key agricultural commodities, and continued supply-side management measures also help mitigate potential supply disruptions,” it added.
The report highlighted that the external sector remains supported by strong export performance, resilient FDI inflows, and comfortable foreign exchange reserves.
The recent de-escalation of tensions in West Asia and progress in US-Iran negotiations have contributed to a correction in Brent crude oil prices, providing some relief from external and inflationary pressures. Recent progress on trade agreements and measures is also expected to further facilitate foreign capital inflows, it said.
“The longer-than- expected duration of the conflict in West Asia tested India’s resilience. Indian policymakers dealt with it with a combination of near-term and structural measures designed to enhance the country’s resilience to future energy shocks and their economic impacts. India’s macroeconomic stability held, and concerns over external stability should dissipate gradually,” the report said.