Adverse monsoon may pose headwinds for growth, inflation

An adverse south-west monsoon may pose headwinds for the domestic growth and inflation outlook, even as the global economic landscape remains fragile, according to the State of the Economy article published in the Reserve Bank of India June Bulletin on Monday.

Geopolitical tensions and trade disruptions have continued to persist globally despite some short-term respite gained through the recent interim US-Iran peace agreement in West Asia.

"Any breakdown of the agreement may reignite material risks in terms of inflationary expectations, disrupted critical energy infrastructure, delayed investment spending, food security concerns, adverse financial stability outlook and structurally lower growth," the article noted.  

Amid this challenging global environment, the Indian economy grew at 7.8% in the fourth quarter of 2025-26, supported by private consumption and fixed investment. High-frequency indicators tracked during the first two months suggest sustained economic momentum in 2026-27, it added.  "The Indian economy entered this turbulence with much better fundamentals relative to many other countries to sustain the shock," the article stated.