The Indian economy continues to remain resilient despite an uncertain global backdrop marked by geopolitical tensions and financial market volatility, according to the Reserve Bank of India’s February 2026 Bulletin.
In the bulletin, the RBI noted that global uncertainty, although moderating from earlier peaks, remained elevated in January amid renewed geopolitical frictions.
Despite these headwinds, domestic economic activity held firm, supported by strong demand conditions and improving corporate performance.
Quarterly results of listed private companies indicated strengthening aggregate sales growth.
Industrial activity remained robust, while the services sector sustained healthy expansion.
Rabi sowing concluded with higher acreage under all major crops, supporting the agricultural outlook and rural demand conditions.
The Bulletin highlighted that the Union Budget 2026-27 balanced growth priorities with fiscal prudence, maintaining a strong thrust on capital expenditure, infrastructure, innovation and human capital development while adhering to a credible fiscal consolidation path.
Inflation remained benign under the revised CPI series base 2024=100.
Headline CPI inflation stood at 2.8 per cent in January 2026, with food inflation at 2.1 per cent and core inflation at 3.4 per cent.
After excluding precious metals, core inflation dropped to 1.9 per cent, reflecting muted underlying price pressures.
Financial conditions showed moderate tightness during the second half of January, but liquidity conditions improved in early February following accelerated government spending and RBI’s liquidity measures.
Credit growth continued to outpace deposit growth during 2025-26.
Indian equity markets, which had remained subdued in January amid tariff-related uncertainties and renewed geopolitical tensions, received a boost towards the end of the month following the India-EU free trade agreement.
Markets rebounded further in early February after the announcement of the interim India-US trade deal and the return of foreign portfolio investors.
The rupee also strengthened as net FPI flows turned positive.
Read also : India’s wholesale inflation rises to 1.81 per cent in January 2026 as manufactured products prices climb
