India's inflation dropped to 3.6% in February 2025

India's inflation rate has dropped significantly, falling from over 6% in October 2024 to 3.6% in February 2025. This decline is helping the country manage trade tensions and uncertainty in the global economy. Strong agricultural performance and increased consumption are boosting economic growth. The Reserve Bank of India (RBI) has projected a GDP growth of 6.7% for the fiscal year 2025-26. The RBI's report highlights that strong production from the kharif and rabi seasons, along with improved reservoir levels, are positively impacting food inflation. The external sector is also supported by steady services exports, which are less impacted by global disruptions. The report emphasizes India's structural strengths, including sound fiscal policies and digital transformation initiatives, as key factors for sustainable economic growth. In February, the RBI lowered its key interest rate by 25 basis points to 6.26%. Economists anticipate another rate cut in April due to the easing inflation. Since last October, foreign portfolio investors have withdrawn almost $29 billion from Indian stocks, marking a significant capital outflow. Despite these challenges, the RBI remains optimistic about India's economy. It notes that the agriculture sector is performing well, and domestic consumption is improving. The report forecasts quarterly GDP growth rates of 6.7% in Q1, 7% in Q2, and 6.5% in both Q3 and Q4. It also points to potential risks, including volatility in commodity prices and weather-related issues that could influence inflation.