State of Economy Report 2025, Purpose and Key Highlights

The State of Economy Report 2025 provides an in-depth analysis of India’s growth trends, inflation, fiscal policies, employment outlook, and key challenges shaping the economic landscape.

Table of Contents

Context: The Reserve Bank of India (RBI) recently released its State of the Economy Report.

What is the State of the Economy Report?

Publisher: Reserve Bank of India (RBI).
Nature: It is an in-house assessment, not an official policy statement of the RBI.

Purpose

To provide a comprehensive review of the Indian and global economy.
To highlight trends in inflation, growth, trade, financial markets, and credit conditions.
To aid policymakers, researchers, and the public in understanding the evolving macroeconomic situation.

Key Highlights of the State of the Economy Report

Inflation Outlook

CPI-based inflation is expected to remain significantly below 4% in 2025.
Likely to dip further in Q2 FY25 due to muted food price pressures and favourable base effects.
Inflation may inch up in Q4, but the full-year average will remain below the 4% target.
CPI inflation stood at 6% in July 2025, down from 2.1% in June 2025.

Food Prices

Cereals: Prices showing an uptick.
Pulses: Mixed trend – tur/arhar dal prices fell, gram dal
Edible oils: Mustard, sunflower, groundnut, soybean, rose; palm oil steady.
Vegetables: Tomato prices are rising; potatoes and onions remain stable.

Fuel Prices

Petrol & Diesel: Retail prices unchanged in August.
Kerosene: Prices edged up.
LPG: Prices unchanged.

Growth Outlook

Favourable monsoon conditions support kharif output.
Rising real rural wages could strengthen rural demand in the second half of FY25.
Risks persist due to uncertainties in India–US trade policy.

Industry & Services

PMI (Purchasing Managers’ Index) for July 2025 showed:
- Higher input price expansion in both manufacturing and services.
- Selling prices also rose for both sectors.

Credit Growth & Financing

Bank credit growth improved in June 2025, led by MSME lending.
Overall flow of resources to the commercial sector increased.
Large corporations increasingly turned to market instruments (commercial papers, corporate bonds) for funding.