NEW DELHI: RBI on Friday said the Indian economy has performed well despite global headwinds and noted that escalation of West Asia conflict this month has resulted in a sharp increase in oil prices, reigniting fears over a build-up of inflationary pressure and further disruption in supply chains.The central bank’s latest RBI Bulletin also said strong FCNR(B) deposits led to brief recoveries in the rupee in early Sept, but the gains reversed in later part of the month on account of higher crude prices. It stated that high level of surplus liquidity in the system following $133 billion FCNR(B) flows can support the ongoing credit growth, driven by acceleration in credit flow to industry. It also said that in Aug, bank deposits grew at their fastest pace in 15 years, resulting in a moderation in incremental credit deposit ratio.“Despite such a challenging global environment, the Indian economy recorded a strong GDP growth in Q1 of 2026-27. High-frequency indicators through Aug reflected sustained demand, with segments of industry and services sectors displaying resilience… India’s financial and external sectors are drawing strength from the real economy, although geopolitical tensions and weather-related uncertainties are acting as key downside risks,” RBI said in its ‘State of the Economy” report. It said that most high frequency indicators remained healthy in Aug.It, however, cautioned that rise in sovereign yields in some of the major advanced economies has put pressure on govt finances.
Gross, net FDI rise
Latest data released by RBI estimated that net FDI jumped 64% to $7.3 billion in July, on the back of robust gross inflows of $14.6 billion, which was an increase of over 31% over a year ago. Communication, financial and computer services were the major sectors, receiving more than four-fifths of the equity inflows (see graphic). Mauritius, the UAE, and the US were the major source countries, accounting for about 70% of equity inflows, RBI said. During April-July, net inflows were 38% higher at $13.4 billion, while gross FDI rose 12.6% to $43.9 billion.On the other hand, after declining for two months, overseas investments also rose 26% in July to $3.4 billion. RBI said over two-thirds of outward FDI flows went to Singapore, the UK, and the UAE, with financial, insurance and business services, and manufacturing accounting for about two-thirds of the outward flows.
