RBI State of the Economy July 2025: Growth and Risks
Why in the news
The RBI’s July 2025 report and May external data showed resilient growth but also volatility and inflation risks.
Key facts
- Supports: better kharif prospects, services momentum, modest industrial growth.
- Moderation: IIP at a 9-month low in May 2025; weak petroleum and electricity use.
- Credit: NBFC lending shrank; personal loans slowed.
- Fiscal: State deficits widened as Union grants fell.
Inflation and external sector
| Theme | Observation |
|---|---|
| Core and food inflation | Core up in June (personal care); food up on onion prices |
| Oil | High import dependence may raise long-term inflation |
| Net FDI (May) | $4 million vs $2.2 billion in May 2024 |
| Forex reserves | Down $5 billion; capital flows too small for the CAD |
Labour
- High MGNREGS demand signals rural distress; LFPR and WPR fell, mostly in rural areas.
Exam angle
- Related terms: IIP, LFPR, WPR, ECB.