India’s economy resilient amid global uncertainty: Brickwork research

Metro India News | Hyderabad

India entered the middle of 2026 with strong economic momentum, supported by resilient domestic demand, robust industrial activity, expanding digitalization, and healthy fiscal collections. According to Brickwork Research’s Monthly Economy Wrap (Issue 47, June 2026), the Indian economy continued to outperform many global peers despite rising geopolitical tensions, elevated commodity prices, and persistent external uncertainties. 

Drawing on data from the Reserve Bank of India (RBI), the Ministry of Finance, and other leading institutions, the report highlights both the strengths and emerging challenges shaping India’s economic outlook. India’s real GDP grew by 7.8% during the fourth quarter of FY26, contributing to an overall annual growth rate of 7.7%, compared with 7.1% in FY25. This performance was driven primarily by strong domestic consumption and a remarkable acceleration in manufacturing activity. 

The manufacturing sector expanded by 10.7% during FY26, up from 9.3% in the previous year, reflecting increased production levels and sustained demand across key industries. However, growth is expected to moderate to around 6.6% in FY27 as global uncertainties and domestic challenges begin to weigh on economic activity. Despite the strong growth trajectory, inflationary pressures have gradually intensified. 

Consumer Price Index (CPI) inflation rose to 3.48% in April 2026, marking the sixth consecutive month of increase, though it remained below the RBI’s medium-term target of 4%. Food inflation emerged as the primary contributor, rising to 4.2% due to volatile weather conditions and supply disruptions. Additional pressures are expected from rising energy prices linked to geopolitical tensions in West Asia, increasing non-food costs, and the fading impact of favorable base effects.

India’s external trade performance remained robust despite disruptions stemming from the West Asia conflict. Total exports reached USD 80.8 billion in April 2026, while imports stood at USD 88.61 billion, resulting in a trade deficit of USD 7.8 billion. Merchandise exports rose nearly 14% year-on-year, supported by higher global commodity prices and successful diversification into new international markets. Trade with West Asia, however, experienced notable declines, with merchandise exports to the region falling 28% and imports declining 31.6% compared to the previous year.

Fiscal indicators remained healthy throughout the period. Goods and Services Tax (GST) collections reached INR 1.94 trillion in May 2026, following a record INR 2.42 trillion collection in April. Import-related GST revenue grew by 19.1% year-on-year, underscoring strong trade and consumption activity. However, regional variations in GST growth highlighted uneven economic performance across states. Karnataka, Maharashtra, Andhra Pradesh, Uttar Pradesh, Kerala, and Gujarat recorded strong revenue growth, while Delhi, Tamil Nadu, and Rajasthan experienced declines.

Agriculture represents another area of concern. The monsoon forecast has been revised downward to approximately 90% of the long-period average due to potential El Niño conditions. A weaker-than-normal monsoon could adversely affect crop yields, particularly for pulses and oilseeds, leading to higher food inflation and weaker rural demand. Such developments would have broader implications for consumption and overall economic growth. Overall, India’s economic performance in FY26 demonstrates considerable resilience in the face of global headwinds.

— Brickwork Ratings Author: Girish Basanthani