NEW DELHI | October 29, 2026 : 📈 India’s economic policy focus for the second half of the current financial year will centre on sustaining economic growth while maintaining price stability, according to the Finance Ministry’s October Monthly Economic Review.
The report highlights strong domestic demand, sustained investment, resilient financial institutions and proactive supply-side measures as key strengths. However, elevated crude oil prices, rising food inflation and uncertainty over the Kharif crop outlook remain important risks.
💹 KEY ECONOMIC HIGHLIGHTS
🔹 11% growth in total merchandise and services exports year-on-year in September 2026.
🔹 23.1% growth in merchandise exports, led by electronics and engineering goods.
🔹 US$721 billion in foreign exchange reserves as of October 16, 2026.
🔹 10.3 months of import cover provided by the country’s foreign exchange reserves, according to the report.
🔹 21.6% year-on-year growth in bank credit, reflecting continued momentum in lending.
🛢️ INFLATION AND CRUDE OIL REMAIN KEY RISKS
Volatile international oil prices could increase imported inflation and put additional pressure on India’s external position. Rising domestic food prices and uncertainty surrounding Kharif crop production add to the challenge.
The report says policymakers will need to balance economic expansion with price stability through continued monitoring, supply-side interventions and appropriate liquidity measures.
🌍 EXTERNAL SECTOR SHOWS RESILIENCE
Despite heightened global uncertainty, India’s external sector remained resilient in September, supported by merchandise exports, a steady services surplus and capital inflows.
The report said the overall trade deficit narrowed during the month. However, the current account deficit widened on a cumulative basis during April–August of FY2026–27.
Pressure on the rupee, geopolitical tensions, volatile energy markets and tighter global financial conditions remain areas requiring close attention.
🏦 FINANCIAL SECTOR REMAINS STRONG
India’s financial sector has shown resilience despite rising global sovereign bond yields and volatile equity markets.
According to the report, money-market transmission remained orderly, with market rates close to the policy repo rate. Liquidity was managed through fully subscribed open market operation (OMO) sales, while bank credit continued to expand strongly.
🚀 WHAT COULD SUPPORT GROWTH IN THE COMING MONTHS?
The Finance Ministry expects several factors to support domestic demand and private investment through the remainder of the fiscal year:
✅ Strong industrial activity and resilient services growth.
✅ Continued expansion in domestic credit.
✅ Structural and tax reforms.
✅ Supply-side measures to ease inflationary pressures.
✅ Adequate foreign exchange reserves to help manage external shocks.
📌 THE BIG PICTURE
India enters the second half of FY2026–27 with significant economic buffers, supported by robust exports, strong credit growth and substantial foreign exchange reserves. Yet sustaining that momentum will require careful management of inflation, energy-price volatility and global uncertainty.
The policy challenge is clear: protect purchasing power without weakening growth, encourage investment while maintaining financial stability, and strengthen resilience against external shocks.
Source: Finance Ministry’s October Monthly Economic Review, as reported on October 29, 2026.
