Indian Economy: A turn in monetary policy

September proved to be a particularly turbulent month in at least four ways:

• Global yields surged following a sell-off in sovereign debt in advanced economies
• Crude oil again breached $100 per barrel amid the escalating conflict in West Asia
• The rainfall deficit widened in August and September after narrowing in July
• Consumer inflation gathered momentum in August and is likely to remain elevated  

Yet, despite mounting risks and uncertainty, India's economy has continued to demonstrate remarkable resilience. Gross domestic product (GDP) growth of 7.8% in the April-June quarter once again surpassed expectations, extending a pattern seen over the past several quarters.

This sustained outperformance underscores the strength of India's domestic growth engines and the economy's ability to weather an increasingly uncertain global environment.

Reflecting the stronger-than-anticipated performance of the economy so far, we have revised our GDP growth forecast for the current fiscal upward to 7.0% from 6.6% earlier.