India Begins FY26 On Solid Footing As Inflation Hits 6-Year Low, Jobs And Trade Hold Steady

Indian economy stands at an advantageous position on the back of stable growth in services and consumption, a steady rise in trade and surplus in capital and financial account amid global uncertainties, according to the monthly economic review (MER) of the Finance Ministry released on Monday.

India will likely sustain its growth momentum in the first quarter of FY26, supported by stable domestic demand, positive signs in business, services activity and a favourable agricultural outlook over the southwest Monsoon.

The upbeat domestic scenario reflects the resilience of the Indian economy amid a grim global environment marred by high commodity prices, unstable external demands and ongoing geopolitical tensions.

Robust Job Market, Tame Inflation

In a major relief to consumers, India’s headline inflation measured by the Consumer Price Index (CPI) has eased to a 6.5-year low of 2.1 per cent in June 2025. The downward trend is driven by falling food prices, particularly vegetable and pulse prices.

On the employment front, white-collar hiring registered a double-digit year-on-year growth, while formal job creation saw a sustainable growth.

The Employees’ Provident Fund Organisation (EPFO) recorded an all-time high in net member addition during May 2025.

The country’s total exports of goods and services surge by 5.9 per cent year-on-year, while remittance inflow grew to a record $135.5 billion in FY25, registering a 14 per cent uptick. The inflows facilitate overall macroeconomic stability and support household consumption.

The Union Government maintained its fiscal discipline while focusing on improving the quality of expenditure.

However, the Finance Ministry signalled a few risks, despite a largely positive outlook. Lower credit growth and poor private investment appetite, even after monetary easing by the central bank and massive cash reserves, reflect borrower caution.

The ongoing US tariff uncertainties can also affect India Inc’s performance in upcoming quarters.

Also Read: Steady As She Goes: India’s Economy Shows Cautious Optimism For FY26