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Kolkata: The Indian economy has performed well on some of the crucial indicators such as inflation, exports and jobs amid global headwinds in the first two months of the current financial year, the Finance Ministry’s ‘Monthly Economic Review for May 2025’ has stated. External sector headwinds such as US trade tariffs, geopolitical tension did not have much of an impact on indicators such as retail inflation, export performance and employment.

The enabling factors were domestic demand which remained robust, cooling inflation (which even went below 3%), resilient exports and steady job generation. There were other indicators too. There was a steady uptick in rural demand. The Rabi harvest was robust too, and a better than normal monsoon expectation provided a fillip to the agri sector, which RBI governor Sanjay Malhotra alluded to in his media briefing while announcing the 50 point cur in Repo Rate on June 6. In the urban consumption canvas, rising air passenger traffic and hotel occupancy, provided positive triggers.

PMI, e-way bill generation, fuel consumption

“The positive trajectory appears to be continuing in FY26, with initial high-frequency indicators (HFI) indicating that economic activity has remained resilient. HFIs such as e-way bill generation, fuel consumption, and PMI indices point to continued resilience,” the ministry’s Economic Review mentioned.

But there were a few points of concern too. “However, there are signs of softening in areas like construction inputs and vehicle sales. Retail and food price inflation registered a sustained and broad-based decline in May 2025, driven by robust agricultural production and effective government interventions,” the Economic Review said.

Exports front

The external front was quite encouraging. The merchandise and services exports from the country displayed a growth rate (year-on-year) of 2.8% in May. Foreign exchange reserves remained healthy with the figure at $699 billion on June 13 that is sufficient for import of 11.5 months. The rupee suffered some degree of volatility against the US dollar.

Employment sector was more or less stable. White-collar hiring in the country recorded a rise in employment in insurance, hospitality, AI/machine learning professionals, real estate and BPO/ITES. “The employment sub-indices of the PMI indicate strong employment growth, with the employment sub-indices reaching a high. Formal job creation is also on the rise, as indicated by the growing net payroll additions under the Employee Provident Fund Organisation,” the Review noted.

Volatile financial sector

The financial markets went through some volatility as an outcome of developments abroad — mostly the global tariffs imposed by US president Donald Trump. However, the Indian government bond market was quite stable in May. The Q4 FY25 results and the dividend of RBI at a record level of 2.69 trillion helped in this regard.