{"id":445,"date":"2026-09-01T13:27:00","date_gmt":"2026-09-01T07:57:00","guid":{"rendered":"https:\/\/thesimplehaishow.com\/thesimplehaishow\/?p=445"},"modified":"2026-09-01T15:44:36","modified_gmt":"2026-09-01T10:14:36","slug":"indias-economic-activity-inflation-remain-stable-despite-external-risks-finance-ministry","status":"publish","type":"post","link":"https:\/\/thesimplehaishow.com\/thesimplehaishow\/news\/indias-economic-activity-inflation-remain-stable-despite-external-risks-finance-ministry\/","title":{"rendered":"India\u2019s Economic Activity, Inflation Remain Stable Despite External Risks: Finance Ministry"},"content":{"rendered":"\n

The Finance Ministry said resilient domestic demand, easing cost pressures and comfortable foreign exchange reserves are supporting the economy despite global uncertainties.<\/em> India\u2019s economic activity, inflation and external position have remained relatively stable despite risks from the global economic environment, according to the Finance Ministry\u2019s Monthly Economic Review for August 2026.<\/p>\n\n\n\n

The report said domestic demand continues to support economic activity, even as the pace of expansion has moderated in some areas. It added that easing cost pressures and firm demand conditions are expected to support growth in the coming months.<\/p>\n\n\n\n

The review was released on August 31, shortly after India reported 7.8% economic growth in the first quarter of FY27. The growth was higher than market expectations and has led economists to raise their full-year growth forecasts to around 7% from earlier estimates of 6.7-6.8%.<\/p>\n\n\n\n

Manufacturing Activity Remains Resilient<\/h3>\n\n\n\n

The Finance Ministry said India\u2019s industrial sector has remained resilient despite a challenging external environment.<\/p>\n\n\n\n

Manufacturing activity continues to expand, while domestic technological capabilities are gradually strengthening. The report said continued investment in research and development, skills, supply-chain resilience and supporting infrastructure will be important for improving industrial competitiveness.<\/p>\n\n\n\n

These measures could also help Indian businesses respond better to disruptions in global supply chains.<\/p>\n\n\n\n

Food Inflation Remains a Risk<\/h3>\n\n\n\n

The outlook for food inflation and agricultural production remains an area of concern.<\/p>\n\n\n\n

The report highlighted the potential impact of an intensifying El Ni\u00f1o, which is expected to peak towards the end of 2026. Changes in weather conditions could affect crop yields during the flowering and grain-formation stages and influence soil moisture and winter temperatures required for the upcoming Rabi season.<\/p>\n\n\n\n

Wheat and mustard could be among the crops affected by these conditions.<\/p>\n\n\n\n

Kharif sowing has gained momentum following stronger monsoon rains across several parts of the country, although the total acreage remains below last year\u2019s level.<\/p>\n\n\n\n

Higher food inflation could also affect household spending. If households have to spend a larger portion of their disposable income on food, spending on non-essential goods and services could come under pressure.<\/p>\n\n\n\n

External Sector Has Buffers<\/h3>\n\n\n\n

India\u2019s external sector remains relatively well positioned to manage changing global trade conditions and volatility in international financial markets, according to the report.<\/p>\n\n\n\n

The current account deficit widened marginally to $3.1 billion in the first quarter of FY27 from $2.9 billion in the same period a year earlier.<\/p>\n\n\n\n

However, the Finance Ministry said a recovery in capital flows, a resilient services surplus and comfortable foreign exchange reserves provide buffers against external pressures.<\/p>\n\n\n\n

India\u2019s participation in international groupings such as BRICS could also support export diversification and improve access to overseas markets. The government is focusing on areas such as intra-BRICS trade, greater participation of small and medium enterprises in international markets and more resilient global value chains.<\/p>\n\n\n\n

Rupee and Global Bond Yields Under Watch<\/h3>\n\n\n\n

The Finance Ministry is also monitoring developments in global sovereign bond markets.<\/p>\n\n\n\n

A rise in global bond yields could affect Indian financial markets in different ways. Indian bond yields could rise alongside global yields, or if domestic yields remain relatively stable, the narrowing difference between Indian and global yields could put pressure on the rupee.<\/p>\n\n\n\n

The rupee has depreciated by around 6% since the beginning of 2026.<\/p>\n\n\n\n

The government is also monitoring global demand for investment capital as developed economies seek funds to finance fiscal spending and refinance existing debt. Changes in the availability and cost of global capital could influence the level of current account deficits that emerging economies can sustainably finance.<\/p>\n\n\n\n

Global Inflation Could Affect India<\/h3>\n\n\n\n

Another area being monitored is the possibility of higher global inflation.<\/p>\n\n\n\n

The report pointed to the potential impact of higher prices for electronic goods and food commodities. Food prices could be affected by dry weather conditions and supply-chain disruptions.<\/p>\n\n\n\n

Any increase in global inflation could influence the monetary policy decisions of major central banks. For India, this could have implications for domestic interest rates, monetary policy and the cost of financing the current account deficit.<\/p>\n\n\n\n

Outlook Remains Cautiously Positive<\/h3>\n\n\n\n

The Finance Ministry\u2019s assessment points to an economy supported by domestic demand, resilient manufacturing activity and relatively strong external buffers.<\/p>\n\n\n\n

However, risks remain from global interest rates, capital flows, currency movements, commodity prices and weather conditions.<\/p>\n\n\n\n

For households and businesses, the trajectory of food inflation and interest rates will remain important, while investors will continue to watch the rupee, global bond yields and foreign capital flows.<\/p>\n\n\n\n

The ministry expects easing cost pressures and steady domestic demand to support economic activity, but global developments are likely to remain a key source of uncertainty for India\u2019s economic outlook.<\/p>\n\n\n\n

Source: Moneycontrol<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

The Finance Ministry said resilient domestic demand, easing cost pressures and comfortable foreign exchange reserves are supporting the economy despite global uncertainties. India\u2019s economic activity, inflation and external position have remained relatively stable despite risks from the global economic environment, according to the Finance Ministry\u2019s Monthly Economic Review for August 2026. The report said domestic […]<\/p>\n","protected":false},"author":6,"featured_media":449,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-445","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/thesimplehaishow.com\/thesimplehaishow\/wp-json\/wp\/v2\/posts\/445","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thesimplehaishow.com\/thesimplehaishow\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thesimplehaishow.com\/thesimplehaishow\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thesimplehaishow.com\/thesimplehaishow\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/thesimplehaishow.com\/thesimplehaishow\/wp-json\/wp\/v2\/comments?post=445"}],"version-history":[{"count":2,"href":"https:\/\/thesimplehaishow.com\/thesimplehaishow\/wp-json\/wp\/v2\/posts\/445\/revisions"}],"predecessor-version":[{"id":451,"href":"https:\/\/thesimplehaishow.com\/thesimplehaishow\/wp-json\/wp\/v2\/posts\/445\/revisions\/451"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thesimplehaishow.com\/thesimplehaishow\/wp-json\/wp\/v2\/media\/449"}],"wp:attachment":[{"href":"https:\/\/thesimplehaishow.com\/thesimplehaishow\/wp-json\/wp\/v2\/media?parent=445"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thesimplehaishow.com\/thesimplehaishow\/wp-json\/wp\/v2\/categories?post=445"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thesimplehaishow.com\/thesimplehaishow\/wp-json\/wp\/v2\/tags?post=445"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}