The Indian economy is demonstrating resilience, bolstered by increased festival spending and a recovering agricultural sector.

After a slowdown in the second quarter of 2024-25, private consumption has rebounded, significantly driven by festive purchases, which has positively influenced domestic demand.

Despite global economic uncertainties, the Reserve Bank of India noted that global economic activity remained resilient in the fourth quarter of 2024, even amid fragile confidence and rising protectionism.

Financial conditions in India continue to be accommodative, supported by robust corporate bond issuances and steady foreign direct investment inflows.

However, private investment remains weak, as evidenced by lower sequential investment in fixed and noncurrent assets during the July-September 2024 period, attributed to subdued corporate earnings.

Inflation pressures are evident, with the Consumer Price Index (CPI) surpassing the upper tolerance band in October 2024, largely due to soaring food prices and rising core inflation.

Record production estimates for kharif foodgrains, along with optimistic expectations for the rabi crop, are set to enhance farm income and stimulate rural demand.

The services sector in India is expected to maintain its growth trajectory, characterized by strong job creation and high levels of consumer and business confidence.

The manufacturing and construction sectors are also anticipated to sustain momentum, driven by electric vehicle adoption and favorable policies that promote job creation in clean energy.

Innovations in agriculture, such as digital crop surveys and drone technology, are expected to improve productivity and efficiency in real-time production assessment and supply management.

E-commerce is flourishing, particularly in rural areas, as companies adapt their marketing strategies to engage Generation Z, despite a decline in foot traffic at physical malls.

Overall, the medium-term economic outlook for India appears optimistic, as the underlying strength of its macroeconomic fundamentals is becoming more evident.