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A sustained focus on strengthening macroeconomic fundamentals and economic reforms will enhance efficiency and productivity, and help the domestic economy maintain high growth momentum amid rapidly changing global scenarios, the Reserve Bank of India (RBI) said in an article on Monday.
“Continued focus on macroeconomic fundamentals and economic reforms should help unlock efficiencies and productivity gains to firmly keep the economy on the high-growth trajectory amidst a fast-changing global environment,” the RBI’s State of Economy article published in December bulletin said. The year 2025 brought about an unprecedented shift in global trade policies, marked by a move towards bilateral renegotiations on tariffs and terms of trade. Its ripple effects on global trade flows and supply chains are still unfolding. This has led to heightened global uncertainties and concerns about the prospects for global growth, the article said.
Though the Indian economy is not fully immune to the external sector headwinds, coordinated fiscal, monetary and regulatory policies have helped build resilience over the years, it said.
The country’s gross domestic product (GDP) grew at 8.2 percent in Q2 FY26 — its fastest pace in six quarters. Domestic drivers, particularly private consumption demand, underpinned the pick-up in growth momentum, the article said.
The high-frequency indicators suggest that overall economic activity held up in the post-festival month of November, it said. “While the low GST revenue collections were largely influenced by GST rate rationalisation, other available high-frequency indicators of economic activity such as e-way bills, petroleum consumption and digital payments, registered a pick-up in growth,” the article said.
Indicators of urban demand strengthened further, building up on the festival season pick-up. Retail passenger vehicle sales grew at their highest pace in over a year, aided by GST benefits, marriage season demand, and improved supply.
The high-frequency indicators for November point to robust industrial activity, it said.
The merchandise trade deficit narrowed on account of a surge in merchandise exports and a contraction in merchandise imports. The contraction in imports in November vis-à-vis October was mainly driven by gold as the post-festive season demand declined.
Earlier this month, Mexico imposed higher import duties ranging from 5 to 50 per cent on 1,400 products imported from countries without a free trade agreement. Mexico is India’s major export destination for three sub-segments of engineering goods, namely, two and three-wheelers, motor vehicles / cars and auto components and parts. “As India does not have a trade agreement with Mexico, tariffs on Indian exports of these goods are set to increase from 20 per cent to 50 per cent from January 1, 2026,” the article said.
