RBI Bulletin - Apr 22, 2025

APRIL 2025 VOLUME LXXIX NUMBER 4Editorial Committee Rajiv Ranjan Ashwani Kumar Tripathi Rekha Misra Anupam Prakash Sunil Kumar Snehal Herwadkar Pankaj Kumar V. Dhanya Shweta Kumari Anirban Sanyal Sujata Kundu Editor G. V. Nadhanael The Reserve Bank of India Bulletin is issued monthly by the Department of Economic and Policy Research, Reserve Bank of India, under the direction of the Editorial Committee. The Central Board of the Bank is not responsible for interpretation and opinions expressed. In the case of signed articles, the responsibility is that of the author. © Reserve Bank of India 2025 All rights reserved. Reproduction is permitted provided an acknowledgment of the source is made. For subscription to Bulletin, please refer to Section ‘Recent Publications’ The Reserve Bank of India Bulletin can be accessed at https://bulletin.rbi.org.inCONTENTS Monetary Policy Statement (April 7-9) 2025 Governor’s Statement: April 9, 2025 1 Resolution of the Monetary Policy Committee (MPC) April 7 to 9, 2025 7 Statement on Developmental and Regulatory Policies 9 Monetary Policy Report – April 2025 11 Speeches Keynote address at the 24th FIMMDA-PDAI Annual conference Shri Sanjay Malhotra 115 Welcome Address at the RBI@90 commemoration function on April 1, 2025 Shri Sanjay Malhotra 121 Address at the Private Sector Collaborative Forum of the Financial Action Task Force (FATF) Shri Sanjay Malhotra 123 Shared Vision, Shared Responsibility – Strengthening NBFCs Shri Swaminathan J 127 Articles State of the Economy 131 Three Years of the Standing Deposit Facility: Some Insights 181 Changing Dynamics of Climate Policy Uncertainty and Energy Commodity Prices 195 Rural Consumer Confidence in India: Bridging the Gap 205 Current Statistics 245 Recent Publications 299MONETARY POLICY STATEMENT (APRIL 7-9) 2025-26 Governor’s StatementGovernor’s Statement MONETARY POLICY STATEMENT (APRIL 7-9) 2025-26 Governor’s Statement* growth. On the inflation front, while the sharper- than-expected decline in food inflation has given us Sanjay Malhotra comfort and confidence, we remain vigilant to the possible risks from global uncertainties and weather This was the 54th meeting overall and the first disturbances. Growth is improving after a weak meeting in the financial year 2025-26 of the MPC. performance in the first half of the financial year The year has begun on an anxious note for the global 2024-25, although it still remains lower than what we economy. Some of the concerns on trade frictions are aspire for. coming true, unsettling the global community. We, Decisions of the Monetary Policy Committee (MPC) at the Reserve Bank, while remaining alert to these After a detailed assessment of the evolving global developments, began the year celebrating the macroeconomic and financial conditions and outlook, completion of 90 years of this august institution since the MPC voted unanimously to reduce the policy its establishment on 1st April, 1935. The Reserve repo rate by 25 basis points to 6.00 per cent with Bank’s journey over the last nine decades is closely immediate effect; consequently, the standing deposit intertwined with the nation’s development and facility (SDF) rate under the liquidity adjustment progress. As a custodian of monetary and financial facility (LAF) shall stand adjusted to 5.75 per cent and stability, the Reserve Bank has evolved over the years the marginal standing facility (MSF) rate and the Bank into a full-service central bank with varied functions Rate to 6.25 per cent. facilitating a market economy. I shall now briefly set out the rationale for these The Monetary Policy Committee (MPC) met on decisions. The MPC noted that inflation is currently the 7th, 8th and 9th of April to deliberate and decide on below the target, supported by a sharp fall in food the policy repo rate in the backdrop of a challenging inflation. Moreover, there is a decisive improvement global environment1. The global economic outlook is in the inflation outlook. As per projections, there is fast changing. The recent trade tariff related measures now a greater confidence of a durable alignment of have exacerbated uncertainties clouding the economic headline inflation with the target of 4 per cent over outlook across regions, posing new headwinds for a 12-month horizon. On the other hand, impeded by global growth and inflation. Amidst this turbulence, a challenging global environment, growth is still on a the US dollar has weakened appreciably; bond yields recovery path after an underwhelming performance have softened significantly; equity markets are in the first half of 2024-25. In such challenging global correcting; and crude oil prices have fallen to their economic conditions, the benign inflation outlook and lowest in over three years. Under these circumstances, moderate growth demand that the MPC continues to central banks are navigating cautiously, with signs of support growth. Accordingly, the MPC unanimously policy divergence across jurisdictions, reflecting their voted to reduce the policy repo rate by 25 basis points own domestic priorities. to 6.0 per cent. Moreover, it also decided to change the The Indian economy has made steady progress stance from neutral to accommodative. It also noted towards the goals of price stability and sustained that the rapidly evolving situation requires continuous * Governor’s Statement - April 9, 2025. monitoring and assessment of the economic outlook. 1 As per the Organization for Economic Co-operation and Development (OECD) Economic Outlook Interim Report, March 2025, global GDP growth Let me dwell a little on the monetary policy stance. is projected to moderate from 3.2 per cent in 2024 to 3.1 per cent in 2025 From a cross-country perspective, monetary policy and 3.0 per cent in 2026, a downward revision of 20 bps and 30 bps respectively vis-à-vis its previous release of December 2024. stance is typically characterised as accommodative, RBI Bulletin April 2025 1MONETARY POLICY STATEMENT (APRIL 7-9) 2025-26 Governor’s Statement neutral or tightening. While an accommodative stance dampens growth by affecting investment and spending entails easy monetary policy that is geared towards decisions of businesses and households. Second, stimulating the economy through softer interest the dent on global growth due to trade frictions will rates; tightening refers to contractionary monetary impede domestic growth. Third, higher tariffs shall policy whereby interest rates are hiked to restrain have a negative impact on net exports. There are, spending and curb economic activity, all with the however, several known unknowns - the impact objective of reining in inflation. A neutral stance is of relative tariffs, the elasticities of our export and typically associated with a state of economy which import demand; and the policy measures adopted by neither calls for stimulating economic activity nor the Government including the proposed Foreign Trade calls for controlling inflation by curtailing demand Agreement with the USA, to name a few. These make the quantification of the adverse impact difficult. and provides flexibility to move in either direction on the basis of evolving economic conditions. The risks to inflation, on the other hand, are two sided. On the upside, uncertainties may lead to In our context, the stance of monetary policy possible currency pressures and imported inflation. signals the intended direction of policy rates going On the downside, slowdown in global growth could forward. Accordingly, with respect to the policy rate, entail further softening in commodity and crude which is the mandate of the MPC, today’s change oil prices, putting downward pressure on inflation. in stance from ‘neutral’ to ‘accommodative’ means Overall, while global trade and policy uncertainties that going forward, absent any shocks, the MPC is shall impede growth, its impact on domestic inflation, considering only two options – status quo or a rate while requiring us to be vigilant, is not expected to be cut. Let me also clarify that the stance should not be of high concern. directly associated with liquidity conditions. While liquidity management is important for monetary Growth policy including decisions related to policy rate, it is Real GDP is estimated to grow at 6.5 per cent in an operating tool with the RBI for various purposes 2024-25 on top of a 9.2 per cent growth rate observed in including monetary policy transmission. Monetary the previous year.2 In 2025-26, prospects of agriculture policy decisions to change policy rates do however sector remain bright on the back of healthy reservoir have implications for liquidity management, being levels and robust crop production.3 Manufacturing the operational tool to carry out the policy changes. To activity is showing signs of revival4 with business summarise, our stance provides policy rate guidance, 2 As per the Second Advance Estimates (SAE) released by National without any direct guidance on liquidity management. Statistics Office (NSO), GDP growth in 2024-25 is estimated at 6.5 per cent I will discuss our approach to management of liquidity as against 9.2 per cent in 2023-24. Private final consumption expenditure (PFCE) and gross fixed capital formation (GFCF) posted a growth of 7.6 per a little later. cent and 6.1 per cent, respectively. Government consumption expenditure (GFCE) increased by 3.8 per cent over the previous year. Gross value added Assessment of Growth and Inflation (GVA) at basic prices (y-o-y) is expected to grow by 6.4 per cent. Agriculture and allied activities witnessed a significant improvement in growth at 4.6 Impact of Global Trade and Policy Uncertainties on per cent in 2024-25 while industrial growth moderated to 4.3 per cent even Growth and Inflation as services grew by 7.5 per cent. 3 All-India water storage in 155 major reservoirs stands at 40 per cent Before I share our assessment of growth and of the total capacity as of April 3, 2025, as against 35 per cent a year ago and decadal average of 34 per cent. (As per the second advance estimate inflation, a few words on the implications of the recent (SAE) for 2024-25, total foodgrain production is estimated to grow by 4.8 global trade and related policy uncertainties are in per cent y-o-y. order. Let me first highlight the possible implications 4 Industry sector picked up modestly by 3.5 per cent in Q3:2024-25 from 2.0 per cent in Q2:2024-25 following the recovery in manufacturing GVA for growth. First and foremost, uncertainty in itself by 3.5 per cent during Q3 after a weak 2.1 per cent growth in Q2. 2 RBI Bulletin April 2025Governor’s Statement MONETARY POLICY STATEMENT (APRIL 7-9) 2025-26 expectations remaining robust5, while services sector growth projection for the current year has been activity continues to be resilient6. marked down by 20 basis points relative to our earlier assessment of 6.7 per cent in the February policy. This On the demand side, bright prospects of the downward revision essentially reflects the impact agriculture sector bode well for rural demand which of global trade and policy uncertainties, which I had continues to be healthy, while urban consumption is highlighted earlier. gradually picking up with an uptick in discretionary spending.7 Investment activity has gained traction8 and Inflation it is expected to improve further on the back of Headline inflation moderated during January- sustained higher capacity utilisation,9 government’s February 2025 following a sharp correction in food continued thrust on infrastructure spending,10 healthy inflation.12 The outlook for food inflation has turned balance sheets of banks and corporates, along with decisively positive. The uncertainties regarding the easing of financial conditions. Merchandise rabi crops have abated considerably and the second exports will be weighed down by global uncertainties, advance estimates point to a record wheat production while services exports are expected to remain and higher production of key pulses over that last resilient.11 Headwinds from global trade disruptions year.13 Along with robust kharif arrivals, this is continue to pose downward risks. expected to set the stage for a durable softening of Taking all these factors into consideration, real food inflation. Sharp decline in inflation expectations GDP growth for 2025-26 is now projected at 6.5 per in our latest survey for three months and one year cent, with Q1 at 6.5 per cent; Q2 at 6.7 per cent; Q3 ahead would also help anchor inflation expectations, at 6.6 per cent; and Q4 at 6.3 per cent. While the risks going ahead.14 Furthermore, the fall in crude oil prices are evenly balanced around these baseline projections, augurs well for the inflation outlook. Concerns on uncertainties remain high in the wake of the recent lingering global market uncertainties and recurrence spike in global volatility. It may be noted that the of adverse weather-related supply disruptions, 5 PMI manufacturing Future Output Index in March 2025 was placed at however, pose upside risks to the inflation trajectory. 64.4. Future Output Index has hovered above 60.0 since April 2023. 6 E-way bills increased by a robust 19.4 per cent in Q4:2024-25. Gross GST 12 CPI headline inflation declined by a cumulative 1.6 percentage points revenues rose by 9.9 per cent and toll collections expanded by 11.9 per during January-February 2025, from 5.2 per cent in December 2024 to a low cent during March 2025. Consumption of finished steel grew by 10.9 per of 3.6 per cent in February 2025. Buoyed by a strong seasonal correction cent and cement production increased by 10.5 per cent in February 2025. in vegetable prices this year, food inflation dropped to a 21-month low of On the other hand, petroleum products consumption contracted by 5.4 3.8 per cent in February from 5.7 per cent in January 2025. Deflation in per cent in February 2025. PMI services for March 2025 moderated to 58.5 fuel group, year-on-year, was at (-) 1.3 per cent in December 2024, (-) 1.5 from 59.0 in February 2025. per cent in January 2025 and (-) 1.3 per cent in February 2025. However, 7 IIP consumer durables expanded 7.2 per cent in January 2025. Domestic CPI excluding food and fuel inflation after remaining steady at 3.6 per air passenger traffic expanded by 12.1 per cent in February 2025 and 10.1 cent, year-on-year, during December 2024-January 2025 inched up to 4.1 per cent in March. per cent in February 2025. 8 Indicators of investment are recording healthy growth. IIP capital 13 As per the Second Advance Estimates of agricultural production goods expanded by 7.8 per cent in January 2025, import of capital goods (kharif and rabi) for the year 2024-25, released in March 2025, the wheat increased by 7.5 per cent during January-February 2025, consumption of production has been estimated at a record 115.4 million tonnes for 2024- finished steel and cement production during January-February 2025 grew 25, which is 1.9 per cent higher than the final estimates of 2023-24. The by 10.9 per cent, and 12.5 per cent, respectively. production of pulses (kharif and rabi) in 2024-25 is estimated to be 3.8 per 9 As per the order books, inventories, and capacity utilisation survey cent higher than the final estimates of 2023-24. The production of key rabi (OBICUS), seasonally adjusted capacity utilisation in manufacturing sector season pulses, such as gram and lentil is estimated to increase by 4.5 per in Q3:2024-25 at 75.3 per cent was well above the long-term average. cent and 1.5 per cent, respectively. 10 As per the Union Budget 2025-26, the central government’s effective 14 In the latest round of survey, households’ perception of the current capital expenditure (including grants-in-aid to state governments for median inflation declined by 50 basis points (bps) and reached 7.8 per capital expenditure) is budgeted to grow by 17.4 per cent. cent. Households’ inflation expectations for the next three months and 11 Services exports increased by 11.8 per cent during January-February one year ahead also came down by 40 bps and 50 bps, reaching 8.9 per cent 2025, on the back of robust software and business exports. and 9.7 per cent, respectively. RBI Bulletin April 2025 3MONETARY POLICY STATEMENT (APRIL 7-9) 2025-26 Governor’s Statement Taking all these factors into consideration, and an import cover of about 11 months.18 Overall, India’s assuming a normal monsoon, CPI inflation for the external sector remains resilient as key indicators stay financial year 2025-26 is projected at 4.0 per cent, robust.19 with Q1 at 3.6 per cent; Q2 at 3.9 per cent; Q3 at 3.8 Liquidity and Financial Market Conditions per cent; and Q4 at 4.4 per cent. The risks are evenly System liquidity was in deficit in January 2025 balanced. with net injection under the liquidity adjustment External Sector facility (LAF) scaling a peak of ₹3.1 lakh crore on 23rd India’s services exports remained resilient January 2025. However, as a result of a slew of measures injecting liquidity of about 6.9 lakh crore20 rupees, the in January-February 2025, driven by software, system liquidity deficit tapered during February-March business and transportation services.15 Going 2025 and further turned into surplus on 29th March forward, net services and remittance receipts are 2025. Coupled with government spending picking up expected to remain in large surplus, partly offsetting pace during the latter half of March, system liquidity the trade deficit. The CAD for 2024-25 and 2025-26 further improved and it stood at a surplus of ₹1.5 lakh are expected to remain well within the sustainable crore as on 7th April, 2025. level. Reflecting these developments, the weighted On the financing side, gross foreign direct average call rate (WACR) softened and remained near investment (FDI) remained strong during the period the repo rate since the last policy meeting.21 The of April 24 to January 25 in 2024-25 reflecting India’s spreads of 3-month CP and 3-month CD rates over strong macroeconomic fundamentals. Net FDI 91-day Treasury bill rate have also softened since the however moderated sharply during this period due second half of March, suggesting improvement in to higher repatriations and outward FDI.16 Net FPI liquidity conditions.22 inflows to India stood at 1.7 billion US dollars during The Reserve Bank is committed to provide 2024-25, supported by debt inflows as the equity sufficient system liquidity. We will continue to segment recorded net outflows. External commercial monitor the evolving liquidity and financial market borrowings and non-resident deposits, on the other conditions and proactively take appropriate measures hand, witnessed higher net inflows compared to that to ensure adequate liquidity. last year.17 As on 4th April, 2025, India’s foreign exchange 18 Based on actual merchandise imports (on a BoP basis) during the four quarters (Q4:2023-24 to Q3:2024-25). reserves stood at 676.3 billion US dollars, providing 19 India’s external debt to GDP ratio stood at 19.1 per cent at end-December 2024 (18.5 per cent at end-March 2024), while the net international 15 India’s services exports grew by 11.8 per cent on a y-o-y basis during investment position (IIP) moderated to (-) 9.8 per cent of GDP at end- January-February 2025. December 2024 from (-) 10.1 per cent of GDP at end-March 2024. 16 Gross FDI inflows grew by 15.3 per cent to US$ 69.4 billion in April- 20 The Reserve Bank conducted 8 OMO purchase auctions injecting January 2024-25 from US$ 60.2 billion during the same period a year ago. liquidity amounting to ₹2.85 lakh crore. 3 term VRR auctions injected Net FDI inflows declined to US$ 2.5 billion in April-January 2024-25 from liquidity to the tune of ₹1.83 lakh crore. 3 USD/INR Buy/Sell swaps auctions US$ 11.5 billion a year ago. injected liquidity to the tune of ₹2.18 lakh crore so far. 2 OMO purchase 17 Net inflows under external commercial borrowings to India increased auctions for an amount of ₹40,000 crore are scheduled later in April 2025. to US$ 15.2 billion during April-February 2024-25 as compared with US$ 21 Average spread of WACR over the policy repo rate was 6 bps during 2.8 billion a year ago. Non-resident deposits recorded a net inflow of US$ February-March 2025 compared to 13 bps during December-January. 14.3 billion in April-January 2024-25, higher than US$ 10.2 billion in the same period last year. Net FPI outflows during January 2025 and February 22 CD and CP spreads averaged 88 bps and 113 bps respectively since mid- 2025 were US$ 6.7 billion and US$ 4.0 billion, respectively. However, net March 2025 as compared to 143 bps and 112 bps, respectively during the FPI inflows stood at US$ 3.8 billion in March 2025. first half of March. 4 RBI Bulletin April 2025Governor’s Statement MONETARY POLICY STATEMENT (APRIL 7-9) 2025-26 Financial Stability of regulated entities, to the extent possible, keeping in view their differential risk-bearing capabilities, we Financial soundness parameters of the banking shall issue comprehensive regulations on prudential sector continue to be robust.23 The liquidity buffer norms and conduct related aspects for such loans. in the banking system is well above the regulatory threshold.24 Profitability indicators are also healthy Fourth, to harmonise the regulations governing reflecting robust operational efficiency of the non-fund-based facilities across regulated entities, system.25 Similarly, the system-level parameters of we propose to issue comprehensive guidelines. NBFCs too are sound.26 Instructions related to partial credit enhancement (PCE) by regulated entities are also proposed to be Additional Measures revised. This is expected to broaden the funding I shall now announce six additional measures sources for infrastructure financing. related to banking regulation, fintech and payment The draft of these four guidelines and regulations systems. are being published today for public consultation. We First, it is proposed to enable securitisation of shall finalise these guidelines based on the feedback stressed assets through market-based mechanism. received. This is in addition to the existing ARC route under the The other two announcements relate to enabling Securitisation and Reconstruction of Financial Assets NPCI to decide, in consultation with the banks and and Enforcement of Security Interest (SARFAESI) Act, other stakeholders, the transaction limits in UPI for 2002. person to merchant transactions; and making the Second, the extant guidelines on co-lending are Regulatory Sandbox theme-neutral and ‘on-tap’. presently applicable only to arrangements between Necessary directions for the implementation of these banks and NBFCs. Moreover, they are restricted to two measures shall be issued separately. priority sector loans. To exploit the huge potential of Concluding Remarks such lending arrangements, it is proposed to extend them to all regulated entities and to all loans – priority The global economy is going through a period of sector or otherwise. exceptional uncertainties. The difficulty to extract signal from a noisy and uncertain environment poses Third, loans against the collateral of gold challenges for policy making. Nevertheless, monetary jewellery and ornaments, commonly known as gold policy can play a vital anchoring role in ensuring that loans, are extended by regulated entities for both the economy remains on an even keel. consumption and income-generation purposes. In order to harmonise guidelines across various types In our context, as I mentioned earlier, the domestic growth-inflation trajectory demands monetary policy 23 The system-level Capital to Risk Weighted Assets Ratio (CRAR) of 16.43 to be growth supportive, while being watchful on the per cent in December 2024 was well above the regulatory minimum level. Gross non-performing asset (GNPA) ratio at 2.42 per cent in December inflation front. We are aiming for a non-inflationary 2024 improved by 54 bps over December 2023. Special Mention Account growth that is built on the foundations of an (SMA)-2 ratio was 0.90 per cent in December 2024 improved demand and supply response and sustained 24 Liquidity Coverage Ratio (LCR) was 130 per cent as of December 2024. 25 As on December 2024, system level return on asset (RoA), return on macroeconomic balance. As before, we shall remain equity (RoE), and net interest margin (NIM) were at 1.37 per cent, 14.14 agile and decisive in our response and put in place per cent, and 3.49 per cent, respectively. policies that are clear, consistent, credible and in the 26 Total CRAR of NBFCs was 26.22 per cent and Tier I CRAR was 24.13 per cent in December 2024. GNPA ratio improved from 2.70 per cent in best interest of the economy. December 2023 to 2.53 per cent in December 2024. The RoA decreased from 3.11 per cent in December 2023 to 2.86 per cent in December 2024. Thank you. Namaskar and Jai Hind. RBI Bulletin April 2025 5MONETARY POLICY STATEMENT (APRIL 7-9) 2025-26 Resolution of the Monetary Policy Committee (MPC) April 7-9, 2025Resolution of the Monetary Policy Committee (MPC) MONETARY POLICY STATEMENT (APRIL 7-9) 2025-26 April 7 to 9, 2025 Monetary Policy Statement, at 6.5 per cent for 2024-25, on top of 9.2 per cent in 2023-24. Going forward, sustained demand 2025-26 Resolution of the from rural areas, an anticipated revival in urban Monetary Policy Committee consumption, expected recovery of fixed capital formation supported by increased government (MPC) April 7 to 9, 2025* capital expenditure, higher capacity utilisation, and healthy balance sheets of corporates and banks are Monetary Policy Decisions expected to support growth. Merchandise exports The Monetary Policy Committee (MPC) held would be weighed down by the evolving global its 54th meeting from April 7 to 9, 2025 under the economic landscape which appears to be uncertain chairmanship of Shri Sanjay Malhotra, Governor, at the current juncture, while services exports are Reserve Bank of India. The MPC members Dr. Nagesh expected to sustain the resilience. On the supply Kumar, Shri Saugata Bhattacharya, Prof. Ram Singh, side, while agricultural prospects appear bright, Dr. Rajiv Ranjan, and Shri M. Rajeshwar Rao attended industrial activity continues to recover, and services the meeting. sector is expected to be resilient. Headwinds from global trade disruptions continue to pose downward After assessing the current and evolving risks. Taking all these factors into consideration, real macroeconomic situation, the MPC unanimously GDP growth for 2025-26 is now projected at 6.5 per voted to reduce the policy repo rate by 25 basis points to 6.00 per cent with immediate effect. Consequently, cent, with Q1 at 6.5 per cent; Q2 at 6.7 per cent; Q3 the standing deposit facility (SDF) rate under the at 6.6 per cent; and Q4 at 6.3 per cent. (Chart 1). The liquidity adjustment facility (LAF) shall stand risks are evenly balanced. adjusted to 5.75 per cent and the marginal standing CPI headline inflation declined by a cumulative facility (MSF) rate and the Bank Rate to 6.25 per cent. 1.6 percentage points during January-February 2025, This decision is in consonance with the objective of from 5.2 per cent in December 2024 to a low of 3.6 achieving the medium-term target for consumer price per cent in February 2025. On the back of a strong index (CPI) inflation of 4 per cent within a band of +/- seasonal correction in vegetable prices this year, 2 per cent, while supporting growth. food inflation dropped to a 21-month low of 3.8 per Growth and Inflation Outlook cent in February. Fuel group continued to remain in deflation. Core inflation, after remaining steady in The global economic outlook is fast changing. The December 2024-January 2025, inched up to 4.1 per recent trade tariff related measures have exacerbated cent in February 2025, driven primarily by a sharp uncertainties clouding the economic outlook across pick-up in gold prices. regions, posing new headwinds for global growth and inflation. Financial markets have responded through The outlook for food inflation has turned sharp fall in dollar index and equity sell-offs with decisively positive. There has been a substantial significant softening in bond yields and crude oil and broad-based seasonal correction in vegetable prices. prices. The uncertainties on rabi crops have abated considerably and the second advance estimates point The National Statistics Office (NSO) has to a record wheat production and higher production estimated real Gross Domestic Product (GDP) growth of key pulses over last year. Along with robust kharif * Released on April 9, 2025. arrivals, this is expected to set the stage for a durable RBI Bulletin April 2025 7MONETARY POLICY STATEMENT (APRIL 7-9) 2025-26 Resolution of the Monetary Policy Committee (MPC) April 7 to 9, 2025 softening in food inflation. Sharp decline in inflation a 12-month horizon. On the other hand, impeded by expectations for three months and one year ahead a challenging global environment, growth is still on a period would help anchor inflation expectations going recovery path after an underwhelming performance ahead. Furthermore, the fall in crude oil prices augurs in the first half of 2024-25. While the risks are evenly well for the inflation outlook. Concerns on lingering balanced around the baseline projections of growth, global market uncertainties and recurrence of adverse uncertainties remain high in the wake of the recent weather-related supply disruptions pose upside risks spurt in global volatility. In such challenging global to the inflation trajectory. Taking all these factors into economic conditions, the benign inflation and consideration, and assuming a normal monsoon, CPI moderate growth outlook demands that the MPC inflation for the financial year 2025-26 is projected at continues to support growth. Accordingly, the MPC 4.0 per cent, with Q1 at 3.6 per cent; Q2 at 3.9 per unanimously voted to reduce the policy repo rate by 25 cent; Q3 at 3.8 per cent; and Q4 at 4.4 per cent. The basis points to 6.00 per cent. Moreover, it also decided risks are evenly balanced. to change the stance from neutral to accommodative. However, it noted that the rapidly evolving situation Rationale for Monetary Policy Decisions requires continuous monitoring and assessment of The MPC noted that inflation is currently the economic outlook. below the target, supported by a sharp fall in food The minutes of the MPC’s meeting will be inflation. Moreover, there is a decisive improvement published on April 23, 2025. in the inflation outlook. As per projections, there is now a greater confidence of a durable alignment of The next meeting of the MPC is scheduled from headline inflation with the target of 4 per cent over June 4 to 6, 2025. 8 RBI Bulletin April 2025 tnec reP Chart 1: Quarterly Projection of Real GDP Growth (y-o-y) 14 12 10 8 6 4 2 0 50 per cent CI 70 per cent CI 90 per cent CI CI - Confidence Interval 32-2202:1Q 32-2202:2Q 32-2202:3Q 32-2202:4Q 42-3202:1Q 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4Q 62-5202:1Q 62-5202:2Q 62-5202:3Q 62-5202:4Q Chart 2: Quarterly Projection of CPI Inflation (y-o-y) 50 per cent CI 70 per cent CI 90 per cent CI tnec reP 10 8 6 4 2 0 CI - Confidence Interval 32-2202:1Q 32-2202:2Q 32-2202:3Q 32-2202:4Q 42-3202:1Q 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4Q 62-5202:1Q 62-5202:2Q 62-5202:3Q 62-5202:4QMONETARY POLICY STATEMENT (APRIL 7-9) 2025-26 Statement on Developmental and Regulatory PoliciesStatement on Developmental and Regulatory Policies MONETARY POLICY STATEMENT (APRIL 7-9) 2025-26 Statement on Developmental (REs) for both consumption and income-generation purposes. Prudential and conduct related regulations and Regulatory Policies for such loans have been issued from time to time and they vary for different categories of REs. With This Statement sets out various developmental a view to harmonizing such regulations across REs and regulatory policy measures relating to (i) while keeping in view their risk-taking capabilities, Regulations; (ii) Payment Systems; and (iii) Fintech. and also to address a few concerns that have been I. Regulations observed, it has been decided to issue comprehensive regulations, on prudential norms and conduct related 1. Securitisation of Stressed Assets Framework aspects, for such loans. The draft guidelines in this A prudentially structured securitisation regard are being issued for public comments. transaction can be an enabler for resolution of stressed 4. Review of Non-Fund Based Facilities assets as it is expected to improve risk distribution and provide an exit route from such exposures Non-fund based (NFB) facilities like Guarantees, for lenders. With this objective, RBI had released a Letters of Credit, Co-Acceptances etc. play a significant discussion paper on Securitisation of Stressed Assets role in facilitating effective credit intermediation, Framework in January 2023, to seek comments besides enabling seamless business transactions, from market participants on various aspects of the including trade transactions. It has now been decided framework. After factoring in the suggestions received to harmonize and consolidate guidelines covering from the stakeholders on the discussion paper, the these facilities across all REs. The revised guidelines draft framework for securitisation of stressed assets include a review of instructions on issuance of partial is being issued for public comments. The framework credit enhancement by REs, with a view to, inter intends to enable securitisation of stressed assets alia, broadening funding sources for infrastructure through a market-based mechanism, in addition to financing. Draft guidelines in this regard are being the existing ARC route under SARFAESI Act, 2002. issued for public comments. 2. Framework on Co-lending arrangements (CLA) II. Payment Systems The extant guidelines on co-lending are applicable 5. Enhancing transaction limits in UPI only to arrangements between banks and NBFCs At present, the transaction amount for UPI, for priority sector loans. In light of the evolution covering both Person to Person (P2P) and Person of such lending practices, and the potential of such to Merchant payments (P2M), is capped at ₹1 lakh lending arrangements in catering to the credit needs except for specific use cases of P2M payments which of a wider segment in a sustainable manner, it has have higher limits, some at ₹2 lakh and others at ₹5 been decided to expand the scope for co-lending and lakh. issue a generic regulatory framework for all forms To enable the ecosystem to respond efficiently of co-lending arrangements among REs. The draft to new use cases, it is proposed that NPCI, in guidelines are being issued for public comments. consultation with banks and other stakeholders of 3. Review of Guidelines for Lending against Gold the UPI ecosystem, may announce and revise such Jewellery limits based on evolving user needs. Appropriate Loans against the collateral of gold jewellery safeguards will be put in place to mitigate risks and ornaments are extended by regulated entities associated with higher limits. Banks shall continue RBI Bulletin April 2025 9MONETARY POLICY STATEMENT (APRIL 7-9) 2025-26 Statement on Developmental and Regulatory Policies to have the discretion to decide their own internal in October 2021. A fifth ‘Theme Neutral’ cohort with a limits within the limits announced by NPCI. specified time window for receiving applications was P2P transactions on UPI shall continue to be also announced in October 2023, which will close in capped at ₹1 lakh, as hitherto. NPCI will be advised May 2025. Under this cohort, any innovative product accordingly. or solution within the regulatory ambit of RBI could be tested if found eligible. Based on the experience III. Fintech gained and feedback received from stakeholders, it 6. ‘On Tap’ application facility under theme neutral is now proposed to make the Regulatory Sandbox Regulatory Sandbox ‘Theme Neutral’ and ‘On Tap’. The Reserve Bank has been operating the This initiative is expected to foster continuous Regulatory Sandbox (RS) framework since 2019, and four specific thematic cohorts have been announced innovation and keep pace with the rapidly evolving and completed till date. An ‘On Tap’ application FinTech / regulatory landscape. Additional details in facility for themes of closed cohorts was announced this regard will be communicated separately. 10 RBI Bulletin April 2025MONETARY POLICY STATEMENT (APRIL 7-9) 2025-26 Monetary Policy Report - April 2025Monetary Policy Report APRIL 2025 I. Macroeconomic Outlook concerns. Gold prices continued to strengthen and reached new heights every month in 2025 till March. The US dollar index firmed in Q4:2024 due to delayed The domestic economic outlook remains resilient expectations of rate easing by the US Federal Reserve supported by improved consumption demand and strong and anticipated policies of the new US administration macroeconomic fundamentals. Inflation is expected to align but has retreated since mid-January 2025 amidst with the target on account of favourable food inflation weaker growth expectations and heightened trade outlook. Heightened trade tensions, volatile financial policy uncertainty. Global commodity prices softened markets, geopolitical strife, and climate risks weigh heavily somewhat in Q4:2024 but increased sharply in Q1:2025, on the outlook. Monetary policy aims to facilitate conducive largely on account of metals and agricultural prices. macroeconomic conditions that reinforce price stability and Brent crude oil prices rose sharply from late December sustained economic growth. 2024 till mid-January 2025, reflecting sanctions on I.1 Key Developments since the October 2024 MPR Russia's energy sector, threats of tariff imposition, and Since the release of the Monetary Policy Report cold weather conditions. It has softened since then (MPR) in October 2024, global economic activity has following a moderation in geopolitical risk premium remained resilient in 2024 although below historical and improved supply response from Organization of average, with high frequency indicators hinting at the Petroleum Exporting Countries plus (OPEC+). Of slowdown in growth momentum in 2025. Escalating late, energy and metal prices have softened after the trade tensions led by a slew of tariff impositions tariff imposition owing to uncertain global economic impart uncertainty to the growth outlook. Headline outlook. inflation though decelerating, has remained above the Turning to the domestic economy, the second target in many economies owing to the lacklustre and advance estimates (SAE) released by the national uneven pace of disinflation. The decline in headline statistical office (NSO) estimated real gross domestic inflation on account of subdued core inflation (i.e., product (GDP) growth at 6.5 per cent year-on-year CPI excluding food and fuel) augurs well, although (y-o-y) in 2024-25 on the back of robust growth in persistent high services inflation weighs heavily on the private final consumption expenditure. On the supply outlook. The divergence in monetary policy pathways side, real gross value added (GVA) expanded by 6.4 per across countries has continued. As compared to the cent, y-o-y, driven by agriculture and services sectors. highly synchronous tightening phase, there is now a Real GDP growth for Q3:2024-25 was placed at 6.2 per hesitant and guarded rate cut cycle under progress. cent y-o-y, driven by robust private and government consumption expenditure. Financial markets have been on edge due to shifting expectations of monetary policy and fears Headline consumer price index (CPI) inflation, of tariff wars. Geopolitical uncertainties, ratcheting which averaged 4.6 per cent during H1:2024-25, up of trade tensions and withdrawal of portfolio increased to 6.2 per cent in October 2024 but has investors caused retreat in equities from the highs since been easing with February 2025 inflation print in January 2025. The sell off further intensified since at a seven month low of 3.6 per cent, driven by sharp March due to fears of trade war. Sovereign bond yields decline in vegetable prices inflation. Core inflation in advanced economies (AEs) hardened in Q4:2024 which averaged 3.3 per cent in H1:2024-25, however, but have softened thereafter due to growth slowdown inched up to an average of 3.8 per cent in H2:2024- RBI Bulletin April 2025 11APRIL 2025 Monetary Policy Report 25 (up to February). On the contrary, food inflation further deepened but core inflation edged up. After which remained elevated at an average of 8.5 per cent a transient spike in the near term, headline inflation during October- December 2024, decelerated to 3.8 per was expected to moderate. Considering the major cent in February 2025. The deflation in fuel inflation, upside risks on account of unexpected weather however, moderated. events and worsening of geopolitical conflicts, the projection of CPI inflation for 2024-25 was retained After retaining the policy repo rate at 6.5 per at 4.5 per cent. By a majority of 5-1, the MPC decided cent since February 2023, the Monetary Policy to keep the policy repo rate unchanged at 6.5 per Committee (MPC) has embarked on monetary easing cent emphasising the need to remain vigilant of the in H2:2024-25. It changed the stance from withdrawal evolving inflation outlook. Keeping in view the well- of accommodation to neutral in October 2024, and cut balanced growth-inflation dynamics, the MPC also the policy repo rate by 25 basis points (bps) to 6.25 per unanimously decided to change the stance from cent in its February 2025 meeting. In December 2024, ‘withdrawal of accommodation’ to ‘neutral’ to provide the Reserve Bank reduced the cash reserve ratio (CRR) flexibility to monitor and assess the outlook on maintained by banks by 50 bps. inflation and growth and act in accordance with the Monetary Policy Committee Meetings: October 2024 evolving situation while remaining unambiguously - March 2025 focused on achieving a durable alignment of inflation When the MPC met in October 2024, the global with the target, while supporting growth. economy exhibited resilience, although intense At the time of the December 2024 meeting, geopolitical conflicts, geoeconomic fragmentation, the global economy was steady even as inflation financial market volatility and elevated public debt was easing. However, geopolitical risks and policy continued to pose downside risks. Inflation was uncertainty, particularly trade policies, resulted softening but the growing divergence in growth- in heightened volatility in financial markets. On inflation dynamics across countries resulted in the domestic front, real GDP growth of 5.4 per cent varying monetary policy responses. Domestically, in Q2:2024-25 was much lower than expected as real GDP registered a growth of 6.7 per cent, y-o-y, in expansion in private consumption and investment Q1:2024-25, mainly driven by private consumption decelerated, although government spending recovered and investment. The outlook for agriculture remained during the quarter, Real GVA growth was tempered by positive, with above average rainfall, better kharif deceleration in growth of industrial activity reflecting sowing and healthy reservoir levels. Manufacturing subdued performance of manufacturing companies, activity gained momentum due to improved domestic contraction in mining activity and lower electricity demand, lower input costs and a supportive policy demand. Real GDP growth for 2024-25 was projected environment while services sector growth remained at 6.6 per cent. Headline CPI inflation increased to robust. Investment activity was expected to stay 6.2 per cent in October breaching the upper tolerance buoyant due to resilient bank credit growth, higher band, driven by an unanticipated rise in food prices. capacity utilisation, healthy balance sheet of banks Core inflation also registered an uptick in October. CPI and government’s thrust on infrastructure spending. inflation projection for 2024-25 was revised upwards to Real GDP growth for 2024-25 was projected at 7.2 4.8 per cent. The MPC emphasised on the importance per cent. Headline inflation fell sharply from 5.1 of maintaining price stability as a foundation for long- per cent in June to 3.6 per cent and 3.7 per cent term high economic growth and remained committed in July and August, respectively. Deflation in fuel towards restoring the growth-inflation balance in 12 RBI Bulletin April 2025Monetary Policy Report APRIL 2025 the overall interest of the economy. It decided by a Table I.1 Monetary Policy Committee Meetings majority of 4-2 to keep the policy repo rate unchanged and Policy Rate Voting Patterns at 6.5 per cent and voted unanimously to continue Country Policy Meetings: October 2024 - March 2025 with the neutral stance. Total Meetings Meetings Variation meetings with full without in policy In the run up to the February 2025 meeting, the consensus full rate (basis consensus points) global economic landscape remained challenging Brazil 4 4 0 350 with global growth being below the historical average Chile 4 4 0 -50 although high frequency indicators showed signs of Colombia 4 0 4 -75 resilience along with expansion in world trade. The Czech Republic 4 2 2 -50 Hungary* 6 3 2 0 pace of disinflation was marred by services price India 3 1 2 -25 inflation. Strengthening dollar exerted pressure on Japan 4 2 2 25 emerging market currencies and imparted volatility South Africa 3 1 2 -50 Sweden 4 4 0 -100 in financial markets. On the domestic front, real GDP Thailand 3 1 2 -50 growth, as per the first advance estimates (FAE) of the UK 4 0 4 -50 US 4 3 1 -50 NSO, was estimated to grow at 6.4 per cent in 2024-25, Note: *: Total number of meetings happened is six. However, the minutes underpinned by a recovery in private consumption. of last meeting (March 25, 2025) is not published to date. Looking ahead, improved rabi prospects and recovery Sources: Central bank websites. in industrial activity was expected to support growth in continue with the neutral stance so as to retain the 2025-26. Real GDP growth for 2025-26 was projected at flexibility to respond to the evolving macroeconomic 6.7 per cent. Headline inflation softened sequentially environment. in November and December from its October high The MPC’s voting pattern reflects the diversity in driven by the moderation in food inflation, which individual members’ assessments, expectations and was aided by easing of vegetable prices. Core inflation policy preferences - a characteristic also reflected in remained subdued and fuel deflation continued. voting patterns of other central banks (Table I.1). While Inflationary pressures were expected to moderate in most AEs and emerging market economies (EMEs) the near term, due to good kharif production, easing undertook policy easing, concerns on slower pace of in vegetable prices and favourable rabi crop prospects disinflation compounded by developments on the while continued uncertainty in global financial geopolitical front and trade fragmentation suggested markets, volatility in energy prices and adverse weather events posed upside risks. CPI inflation projection for shallow rate cut cycle amidst policy uncertainties. Few 2024-25 was retained at 4.8 per cent. Also, assuming exceptions like Japan and Brazil which continued with a normal monsoon next year, CPI inflation for 2025- monetary tightening to keep inflation around their 26 is projected at 4.2 per cent. The MPC noted that respective targets. inflation is on a declining trajectory largely due to Macroeconomic Outlook favourable outlook on food prices and impact of past Chapters II and III analyse macroeconomic monetary policy measures and is further expected to moderate in 2025-26, gradually aligning with the target. developments relating to inflation and economic Therefore, the evolving growth-inflation dynamics activity during H2:2024-25 (October 2024 - March opened up space to support growth. Accordingly, the 2025). Turning to the baseline assumptions, MPC unanimously voted to reduce the policy repo rate international crude prices exhibited declining pattern by 25 bps to 6.25 per cent. The MPC also decided to during October-December 2024, hovering around US$ RBI Bulletin April 2025 13APRIL 2025 Monetary Policy Report non-OPEC countries. Anxiety over the impact of Table I.2: Baseline Assumptions for Projections sanctions over Russia and speculation of increased Indicator MPR October 2024 MPR April 2025 Crude Oil (Indian Basket) US$ 80 per barrel US$ 70 per barrel restrictions on Iran, along with fears of potential during H2: 2024-25 during 2025-26 supply disruptions, triggered an upswing in prices in Exchange rate ₹ 83.50/US$ during ₹ 86/US$ during early January to around US$ 84 per barrel. Since then, H2: 2024-25 2025-26 Monsoon Normal for 2025-26 Normal for 2025-26 prices gradually declined in February and fell to its Global growth 3.2 per cent in 2024 3.1 per cent in 2025 lowest levels in recent times in March 2025 primarily 3.3 per cent in 2025 3.0 per cent in 2026 due to announcement of production increase by Fiscal deficit To remain within BE To remain within BE (per cent of GDP) 2024-25 2025-26 OPEC along with reduced geopolitical risk premiums Centre: 4.9 Centre: 4.4 and adequate inventory. Geopolitical developments Combined:7.3 Combined: 7.1 Domestic macroeconomic/ No major change No major change continue to impart significant uncertainty to the structural policies during outlook (Charts I.1a and I.1b). The spread between the forecast period Notes: 1. The Indian basket of crude oil represents a derived numeraire global petroleum product prices and crude prices comprising sour grade (Oman and Dubai average) and sweet softened (Chart I.1c). Considering these factors, the grade (Brent) crude oil. 2. The exchange rate path assumed here is for the purpose of baseline assumption for crude price (Indian basket) generating the baseline projections and does not indicate any is reduced to US$ 70 per barrel during 2025-26 ‘view’ on the level of the exchange rate. The Reserve Bank is guided by the objective of containing excess volatility in the (Table I.2). foreign exchange market and not by any specific level of and/or band around the exchange rate. Second, the nominal exchange rate of the Indian 3. BE: Budget estimates. 4. Combined fiscal deficit refers to that of the Centre and States rupee (₹) saw two-way movements in the range of taken together. ₹83.8-87.6 per US dollar during H2:2024-25 with Sources: RBI estimates; Budget documents; International Monetary Fund (IMF); and Organisation for Economic Cooperation and Development a depreciating bias in 2025 till early March. The (OECD). strengthening of US dollar since early October 2024 74 per barrel on account of relatively modest growth resulted in depreciation of EME currencies including in global oil demand as well as robust supply from rupee and increased volatility in financial markets. Chart I.1: Crude Oil Prices Sources: Bloomberg; US Energy Information Administration (EIA); and Petroleum Planning & Analysis Cell. 14 RBI Bulletin April 2025 lerrab rep $SU a: Brent Prices b: World Oil Production, Consumption and Change in Stock Spot price Futures - October 3, 2024 Futures - March 31, 2025 yad rep slerrab noilliM yad rep slerrab noilliM c: Global Crude and Product Prices lerrab rep $SU 115 105 95 85 75 65 55 45 35 25 Petrol Crude oil (Indian basket) Diesel 22-raM 22-luJ 22-voN 32-raM 32-luJ 32-voN 42-raM 42-luJ 42-voN 52-raM 52-luJ 52-voN 110 1 108 0.5 106 104 0 102 100 -0.5 98 -1 96 94 -1.5 92 90 -2 Production Consumption Stock Drawdown (RHS) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 180 160 140 120 100 83.1 80 79.6 72.5 60 40 2022 2023 2024 2025 22-raM 22-yaM 22-luJ 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raMMonetary Policy Report APRIL 2025 Since mid-January, however, the dollar has retreated 3.2 per cent in 2025 before rebounding to 3.3 per cent with high frequency indicators pointing towards in 2026. The recent reciprocal tariff announcements lacklustre growth and elevated policy uncertainty. by the US administration and associated policy Accordingly, EME currencies have recovered, albeit uncertainty, however, poses headwinds to global not fully. Taking into consideration the uncertainty growth and inflation. around US dollar movements, fluctuations of global I.2 The Outlook for Inflation capital flows and international crude oil prices, the In H2:2024-25 so far (up to February), headline baseline assumption for the exchange rate is revised inflation breached the upper tolerance band briefly to ₹86 per US dollar as against ₹83.50 in the October in October 2024, but has since eased on the back of 2024 MPR. declining food inflation. In the March 2025, round Third, global growth was projected at 3.1 per cent of the Reserve Bank’s households survey1, the three in 2025 and 3.0 per cent in 2026 by the Organisation months and one year ahead inflation expectations of for Economic Cooperation and Development (OECD) urban households’ decreased by 40 bps and 50 bps, in its Economic Outlook Interim Report released reaching 8.9 per cent and 9.7 per cent, respectively, as in March 2025. The global disinflation continues, compared to the January 2025 round. The proportion with inflation expected to decline to 4.2 per cent of respondents expecting the general price level to in 2025 and to 3.5 per cent in 2026, according to increase by more than the current rate declined for World Economic Outlook in its January 2025 update both horizons vis-à-vis the previous round (Chart I.3). by International Monetary Fund (IMF) (Chart I.2). In this context, it is pertinent to note that various Global trade growth (goods and services combined) is economic agents form their inflation expectations projected to decelerate from 3.4 per cent in 2024 to based on different factors (Box I.1). Chart I.2: IMF and OECD Projections for Growth and Inflation Note: OECD inflation projections are for G-20 countries Sources: Economic Outlook Interim Report March 2025 Update, OECD; World Economic Outlook January 2025 update, IMF. 1 The Reserve Bank’s inflation expectations survey of households is being conducted in 19 cities since March 2021 (18 cities in the previous rounds) and the results of the March 2025 round are based on responses from 6,091 households. RBI Bulletin April 2025 15 )tnec reP( noitcejorP Chart I.3: Inflation Expectations of Households 6.0 5.7 5.5 5.3 5.0 4.5 4.2 4.0 3.8 3.5 3.5 3.23.33.3 3.23.13.0 3.2 3.0 2.5 2.0 1.5 1.0 0.5 0.0 IMF OECD IMF OECD GDP Inflation 2024 2025 2026 Source: Inflation Expectations Survey of Households, RBI. )tnec reP( etar noitalfnI )tnec reP( stnednopser fo noitroporP 13 80 12 70 11 10 60 9 50 8 7 40 6 30 5 4 20 Three months ahead (Median) One year ahead (Median) Three months ahead price increase more than the current rate (RHS) One year ahead price increase more than the current rate (RHS) 22-raM 22-yaM 22-luJ 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raMAPRIL 2025 Monetary Policy Report Box I.1: What Affects Inflation Expectations of Economic Agents? Anchoring inflation expectations is paramount in monetary policy formulation, particularly in an inflation- Table 1: Long Run Estimates of VEC Model targeting framework. Empirical evidence suggests Variable Financial Daily Self that positive changes in interest rates cause inflation sector workers employed expectations to decline (Goncalves et al., 2025). However, employees monetary responses of different agents vary, i.e., wacr(-1) -0.297* -0.260 -0.407* different categories of respondents respond differently (0.113) (0.136) (0.121) to changes in monetary policy. An increase in the repo inflation(-1) 0.443** 0.529*** 0.526*** rate was found to have a sobering impact on inflation (0.095) (0.115) (0.102) expectations of the financial and business sector agents govt_share(-1) 0.053 -0.229** -0.059 but have a contrary impact for trade unions (Mlangeni (0.056) (0.067) (0.060) and Buthelezi, 2023). ln_crude_oil 1.248 4.127*** 3.901*** (0.509) (0.617) (0.546) To examine this phenomenon in the Indian context, constant 2.451 -5.017 -5.977 a vector error correction model (VECM) is used to (1.987) (2.409) (2.131) explore the relationship between key indicators and Error Correction, -0.904** -0.278* -0.417* inflation expectations of different economic agents (0.132) (0.094) (0.125) such as financial sector employees, daily workers, and α R-squared 0.503 0.158 0.193 self-employed workers, using the bi-monthly inflation Johansen cointegration 2 2 2 expectations data from January 2017 to January 2025 with test for no. of C.E. the following specification: Observations 49 49 49 Standard errors in parentheses. where α βt * p < 0.10, ** p < 0.05, *** p < 0.01 C.E. denotes cointegrating equations where x t is Δt xhte = v Γe *ct xot-r1 +o f ϵ te , n d o genou s Γ v =a ria *bles, is the Source: RBI staff estimates. adjustment coefficient and βt is the cointegrating vector (which defines the long-term relationship betwαeen the employed. Also, financial sector employees are found to variables) and ϵ is the error term. have a higher adjustment factor as compared to other t groups, which suggest faster reaction to any deviation The model is defined as follows: in actual inflation from the long-run steady state. Past ( wacr inflation govt_ inflation impacts positively in the formation of inflation share ln_crude_oil ) expectations for all groups suggesting persistence. In ΔYt+1 = α*Yt + β1* t-1 + β2* t-1 + β3* contrast, crude oil prices are found to impact inflation where is one t-y1e +a r β 4a *head inflatito +n c e +x p ϵetctations of expectations of self-employed and daily workers only financial sector employees, daily workers, and the self-emYpt loyed, wacr is the weighted average call rate (Table 1). Overall, the findings suggest that the formation of inflation expectations of different economic agents are representing monetary policy; inflation is CPI inflation; governed by diverse factors corroborating cross-country govt_share is the share of government expenditure in experience. GDP and ln_crude_oil represents natural logarithm of global crude oil prices which is an average of Brent, West References: Texas Intermediate (WTI) spot and Dubai Fateh. The 1. Goncalves, M., Rodrigues, M., and Genta, F (2025). unit root test suggests that all variables are integrated of “Monetary Policy and Inflation Expectations: High- order 1. Using appropriate lag length criteria, Johansen Frequency Evidence from Brazil”, IMF Working Cointegrating test finds a cointegrating relationship among the variables. Paper WP/25/48. The results suggest that monetary policy changes have a 2. Mlangeni, T., and Buthelezi, E. M (2023). “Monetary differential impact on inflation expectations of various policy and inflation expectations: impact and groups. Inflation expectations are found to be negatively causal analysis of heterogeneous economic agents’ associated with the change in the policy interest rate in expectations in South Africa”, Journal of Applied the long-run for financial sector employees and the self- Economics, 27:1. 16 RBI Bulletin April 2025Monetary Policy Report APRIL 2025 Chart I.4: Expectations about Cost of Raw Materials/Inputs and Selling Prices Manufacturing firms polled in the January-March and intoxicants, and fuel and light) is expected to 2025 round of the Reserve Bank’s industrial outlook be at 4.0 per cent during Q4:2024-25, thereafter, survey expect pressures from cost of raw materials it is expected to remain around 4.2-4.3 per cent till Q3:2025-26 and at 4.5 per cent in Q4. to ease and growth in selling price to moderate in Q1:2025-26 vis-à-vis the previous quarter (Chart I.4a).2 Long-run inflation expectations of professional Both services sector companies and infrastructure forecasters – measured by their 5 and 10 years ahead firms expect higher input cost pressures and higher expectations – are at 4.5 per cent and 4.3 per cent, output prices in Q1:2025-26 (Charts I.4b and I.4c).3 respectively, in the current round (Chart 1.5 b). In the Purchasing Managers Index (PMI) surveys for Looking ahead, the inflation outlook will be March 2025, input prices increased for manufacturing conditioned by several factors, both global and firms and declined for services firms vis-à-vis the domestic. Food inflation may continue to ease due previous month while output prices declined for both. to robust kharif harvest arrivals which, coupled with promising rabi crop, bode well for inflation Professional forecasters surveyed by the Reserve outlook. The Union Budget proposals on agriculture Bank in March 2025 projected CPI inflation to decline and the commitment to fiscal consolidation further from 5.6 per cent in Q3:2024-25 to 3.9 per cent in Q4. strengthens the inflation outlook. However, lingering They expect it to remain around 3.9-4.0 per cent till uncertainty in global financial markets, volatility in Q3 of 2025-26 before increasing to 4.5 per cent in energy prices, adverse weather events, rising global Q4:2025-26 (Chart I.5a and Table I.3).4 Core inflation supply chain pressures and continuing geopolitical (i.e., CPI excluding food and beverages, pan, tobacco strife remain key risks. 2 The results of the January-March 2025 round of the industrial outlook survey are based on responses from 1,310 companies. 3 Based on 725 services companies and 154 infrastructure firms polled in the January-March 2025 round of the services and infrastructure outlook survey. 4 45 panellists participated in the March 2025 round of the Reserve Bank’s survey of professional forecasters. RBI Bulletin April 2025 17 )tnec reP( esnopser teN a: Manufacturing Firms b: Services Firms c: Infrastructure Firms Cost of raw materials Selling price )tnec reP( esnopser teN )tnec reP( esnopser teN 80 60 40 20 12.5 0 -20 -40 -40.1 -60 -80 -100 Cost of inputs Selling price Cost of inputs Selling price Note: Net response is the difference between the share of respondents reporting optimism and those reporting pessimism. The range is -100 to 100. A positive/ negative value of net response is considered as optimistic/pessimistic from the view point of respondent firms. Therefore, higher positive values of selling prices indicate increase in output prices while lower values for the cost of raw materials/cost of inputs indicate higher input price pressures and vice versa. Sources: Industrial Outlook Survey and Services and Infrastructure Outlook Survey, RBI. 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 80 60 55.8 40 20 0 -20 -40 -60 -69.2 -80 -100 2022-23 2023-24 2024-25 2025- 26 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 80 60 62.1 40 20 0 -20 -40 -60 -71.1 -80 -100 2022-23 2023-24 2024-25 2025- 26 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2022-23 2023-24 2024-25 2025- 26APRIL 2025 Monetary Policy Report Taking into account the initial conditions, signals time-series and structural models5, CPI inflation from forward-looking surveys and estimates from is projected to average 4.0 per cent in 2025-26 – 3.6 per cent in Q1, 3.9 per cent in Q2, 3.8 per cent in Q3 Table I.3: Projections - Reserve Bank and and 4.4 per cent in Q4, with risks evenly balanced Professional Forecasters (Per cent) (Chart I.6 and Table I.3). The 50 per cent and the 70 2024-25 2025-26 2026-27 per cent confidence intervals for headline inflation Reserve Bank’s Baseline Projections in Q4:2025-26 are 2.8-6.0 per cent and 1.9-6.9 per Inflation 4.7* 4.0 4.3 cent, respectively. For 2026-27, assuming a normal Real GDP growth 6.5@ 6.5 6.7 Median Projections of Professional Forecasters monsoon, and no further exogenous or policy shocks, Inflation, Q4 (y-o-y) 3.9 4.5 - structural model estimates indicate that inflation Real GDP growth 6.4 6.5 6.6 Gross domestic saving (per cent of GNDI) 30.2 30.4 30.3 will average 4.3 per cent with 4.5 per cent in Q1, 4.3 Gross capital formation (per cent of GDP) 31.0 30.7 31.1 per cent in Q2, 4.4 per cent in Q3 and 4.3 per cent in Credit growth of scheduled commercial banks 11.5 12.3 13.5 Combined gross fiscal deficit (per cent of GDP) 7.8 7.4 7.1 Q4. The 50 per cent and the 70 per cent confidence Central government gross fiscal deficit (per 4.8 4.4 4.3 intervals for headline inflation in Q4:2026-27 are 2.6- cent of GDP) Repo rate (end-period) 6.25 5.75 - 6.0 per cent and 1.7-6.9 per cent, respectively. Yield on 91-days treasury bills (end-period) 6.5 6.0 6.4 Yield on 10-year central government The baseline forecasts are subject to several 6.6 6.4 6.5 securities (end-period) upside and downside risks. The upside risks emanate Overall balance of payments (US$ billion) 4.1 17.0 24.1 Merchandise exports growth -0.2 3.5 5.0 from continuing geopolitical conflicts and resultant Merchandise imports growth 4.6 4.5 5.5 supply disruptions; volatility of energy prices; and Current account balance (per cent of GDP) -0.8 -1.0 -1.0 adverse weather events. The downside risks could Notes: GNDI: Gross National Disposable Income. @: NSO Second Advance Estimates; emanate from an early resolution of geopolitical *: Average CPI Inflation in 2024-25 (up to February). Sources: RBI staff estimates; and Survey of Professional Forecasters conflicts; adherence to fiscal consolidation and (March 2025). 5 Joice John, Deepak Kumar, Asish Thomas George, Pratik Mitra, Muneesh Kapur and Michael Debabrata Patra (2023), “A Recalibrated Quarterly Projection Model (QPM 2.0) for India”, Reserve Bank of India Bulletin, February, Volume LXXVII(2), pp.59-77. 18 RBI Bulletin April 2025 tnec reP )tnec reP( etar noitalfnI Chart I.5: Inflation Expectations of Professional Forecasters a: CPI Inflation Expectations : Short-run* b: CPI Inflation Expectations: Long-run 8 7 6 5.6 5 4.5 4.0 4.0 3.9 4 3.9 3 2 1 2022-23 2023-24 2024-25 2025-26 Actual Median projection Survey Round *: Four quarters ahead expectations in March 2025. Five years ahead Ten years ahead Sources: Survey of Professional Forecasters, RBI; and National Statistical Office. 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 6 5 4 3 61-raM 61-luJ 61-voN 71-raM 71-luJ 71-voN 81-raM 81-luJ 81-voN 91-raM 91-luJ 91-voN 02-raM 02-luJ 02-voN 12-raM 12-yluJ 12-voN 22-raM 22-luJ 22-voN 32-raM 32-luJ 32-voN 42-raM 42-luJ 42-voN 52-raMMonetary Policy Report APRIL 2025 Chart I.7: Consumer Confidence Source: Consumer Confidence Survey, RBI. debt path; further correction in global crude and Consumers’ optimism for the year ahead, measured commodity prices in case of slowing global demand; by the future expectations index, strengthened and improvement in supply conditions. further and maintained its resilience in the optimistic territory (Chart I.7). I.3 The Outlook for Growth Reserve Bank's industrial outlook survey results Domestic economic activity remains strong reveal that business optimism in the manufacturing supported by revival in consumption as well sector for Q1:2025-26 moderated marginally, as government’s capex push. Pick up in private which is partly seasonal (Chart I.8a). The services consumption, upturn in agricultural activity, and infrastructure companies, on the other hand, continuing resilience of the services sector, high remained optimistic about the overall business capacity utilisation, healthy balance sheets of banks situation in Q1:2025-26 (Charts I.8b and I.8c). and corporates, and government’s continued thrust on capital expenditure augur well for the growth Recent surveys by other agencies indicate a outlook. Uncertainty about global trade owing to mixed picture on business expectations relative to rising protectionist measures, persistent geopolitical the previous round (Table I.4). In the PMI surveys for tensions, rising supply chain pressures, and volatile March 2025, manufacturing firms remained upbeat global financial conditions, however, render the about the year ahead though sentiments moderated outlook uncertain. for services firms. Turning to the key messages from forward- Professional forecasters polled in the March 2025 looking surveys, consumer confidence (the current round of the Reserve Bank’s survey expected real situation index) improved in the pessimistic territory GDP growth at 7.0 per cent during the last quarter of in March 2025 vis-à-vis the previous round, driven by 2024-25. Growth is expected at 6.5-6.7 per cent during improved sentiments across all survey parameters6. Q1-Q4:2025-26 (Chart I.9 and Table I.3). 6 The Reserve Bank’s consumer confidence survey is being conducted in 19 cities since March 2021 (13 cities in the previous rounds) and the results of the March 2025 round are based on responses from 6,021 respondents. RBI Bulletin April 2025 19 xednI 130 122.4 120 110 100 95.5 90 80 70 60 50 40 Current situation Future expectations 22-raM 22-yaM 22-luJ 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM Chart I.6: Projection of CPI Inflation (y-o-y) tnec reP 10 8 6 4 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2023-24 2024-25 2025-26 2026-27 50 per cent CI 70 per cent CI 90 per cent CI CI-Confidence Interval Note: The fan chart depicts uncertainty around the baseline projection path. The baseline projections are conditioned upon the assumptions set out in Table I.2. The thick red shaded area represents 50 per cent confidence interval, implying that there is 50 per cent probability that the actual outcome will be within the range given by the thick red shaded area. Likewise, for 70 per cent and 90 per cent confidence intervals, there is 70 per cent and 90 per cent probability, respectively, that the actual outcomes will be in the range represented by the respective shaded areas. Source: RBI staff estimates.APRIL 2025 Monetary Policy Report Chart I.8: Business Assessment and Expectations a: Manufacturing Firms b: Services Firms c: Infrastructure Firms Assessment Expectations Assessment Expectations Assessment Expectations Sources: Industrial Outlook Survey and Services and Infrastructure Outlook Survey, RBI. Real GDP growth was higher at 6.2 per cent in cent in Q4 – with risks evenly balanced around this Q3:2024-25 as compared with 5.6 per cent in Q2. baseline path (Chart I.10 and Table I.3). Assuming a Taking into account the baseline assumptions, survey normal monsoon and no major exogenous or policy indicators and model forecasts, real GDP growth is shocks, structural model estimates for 2026-27 expected at 6.5 per cent in 2025-26 – 6.5 per cent in indicate real GDP growth at 6.7 per cent, with Q1 at Q1; 6.7 per cent in Q2; 6.6 per cent in Q3 and 6.3 per 6.5 per cent, Q2 at 6.4 per cent, Q3 at 6.8 per cent and Q4 at 6.8 per cent. Table I.4: Business Expectations Surveys Item NCAER FICCI Dun and CII Business Overall Bradstreet Business Confidence Business Composite Confidence Index Confidence Business Index (January Index Optimism (March 2025) (November Index 2025) 2024) (April 2025) Current level of 138.4 62.5 120.2 63.7 the index Index as per 134.3 67.3 114.4 66.2 previous survey % change (q-o-q) 3.0 -7.1 5.1 -3.8 sequential % change (y-o-y) 8.5 -6.6 11.2 -6.8 Notes: 1. NCAER: National Council of Applied Economic Research. 2. FICCI: Federation of Indian Chambers of Commerce & Industry. 3. CII: Confederation of Indian Industry. 4. Dun and Bradstreet Composite Business Optimism Index is for Q1:2025-26, CII Business Confidence Index is for Q4:2024- 25, FICCI Overall Business Confidence Index is for Q2:2024-25, and NCAER Business Confidence Index is for Q3:2024-25 Sources: NCAER, FICCI, CII and Dun & Bradstreet Information Services India Pvt. Ltd. 20 RBI Bulletin April 2025 xednI no esnopseR teN )tnec reP( noitautiS ssenisuB llarevO no esnopseR teN )tnec reP( noitautiS ssenisuB llarevO 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2022-23 2023-24 2024-25 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 62-5202 2022-23 2023-24 2024-25 62-5202 140 80 80 69.6 68.9 130 60 60 120 40 40 37.9 117.5 34.9 110 20 20 110.4 100 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2022-23 2023-24 2024-25 62-5202 Chart I.9: Professional Forecasters' Projection of Real GDP Growth Sources: Survey of Professional Forecasters, RBI; and National Statistical Office. tnec reP 14 12 10 8 6.2 7.0 6.6 6.7 6.5 6.5 6 4 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2022-23 2023-24 2024-25 2025-26 Actual Median projectionMonetary Policy Report APRIL 2025 and retaliatory tariffs owing to protectionist trade Chart I.10: Projection of Growth in policies adopted by major economies, prolonged Real GDP (y-o-y) geopolitical conflicts, volatility in global financial and commodity markets and possibility of adverse climate events. Against this backdrop, this section explores the plausible alternative scenarios to assess the balance of risks around the baseline projections of inflation and growth. (i) Global Growth Uncertainties Global economic activity remained steady in H2:2024, albeit marred by sluggish growth recorded by some Asian and European economies as weakness in manufacturing and trade exports offset the robust growth momentum in the United States. Going forward, however, global growth is prone There are upside and downside risks to this to considerable uncertainties. Trade tensions and baseline growth path. The upside risks emanate geopolitical conflicts between major economies are from revival in corporate investment cycle; bound to create uncertainties in global financial improving business sentiments; faster global markets, trigger a slowdown in global trade and disinflation; quick resolution of global trade related create disruptions in supply chains. Additionally, issues; continued softening of global commodity protectionist trade policies including reciprocal prices; and an early resolution of the geopolitical tariffs will further fragment global trade and have conflicts. On the contrary, increasing trade an adverse impact on growth prospects leading to fragmentation due to protectionist policies including potential increase in input costs for businesses. higher tariffs; further escalation in geopolitical Major central banks could also diverge in the tensions; volatility in international financial pace and direction of monetary policy actions in markets; frequent weather-related disturbances; and achieving the last mile of disinflation, inducing supply chain disruptions pose downside risks to the higher volatility in global financial markets with baseline growth path. spillover effects on EMEs. Global economic outlook is also subject to headwinds from fiscal sustainability I.4 Balance of Risks concerns, occurrence of extreme weather events and The baseline projections of growth and technological disruptions. If some of these scenarios inflation are based on the set of assumptions materialise, and if global growth turns out to be 100 related to the likely path of key domestic and global bps lower than assumed in the baseline, domestic macroeconomic variables which are set out in Table growth and inflation could be lower by around 30 1.2. These baseline assumptions are, however, bps and 15 bps, respectively, in comparison with the subject to uncertainties emanating from reciprocal baseline projections. However, if there is a faster RBI Bulletin April 2025 21 tnec reP 15 10 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2023-24 2024-25 2025-26 2026-27 50 per cent CI 70 per cent CI 90 per cent CI CI-Confidence Interval Note: The fan chart depicts uncertainty around the baseline projection path.(cid:31)The baseline projections are conditioned upon the assumptions set out in Table I.2. (cid:31)The thick green shaded area represents 50 per cent confidence interval, implying that there is 50 per cent probability that the actual outcome will be within the range given by the thick green shaded area. Likewise, for 70 per cent and 90 per cent confidence intervals, there is 70 per cent and 90 per cent probability, respectively, (cid:31)that the actual outcomes will be in the range represented by the respective shaded areas.(cid:31) Source: RBI staff estimates.APRIL 2025 Monetary Policy Report recovery in global trade owing to quicker resolution global demand, and restriction in oil supplies due of trade related issues between the major economies to continuation of geo-political tensions may put and synchronised accommodative monetary policy upward pressure on crude oil prices. In a scenario, due to benign inflation outlook going forward, global when crude oil prices are higher by 10 per cent than growth prospects may improve. If global growth is the baseline assumption, domestic inflation may higher by 50 bps relative to the baseline, domestic turn out to be higher by 30 bps and growth may be growth and inflation could turn out to be higher weaker by around 15 bps. (Charts I.11a and I.12a). by around 15 bps and 7 bps, respectively (Charts (iii) Exchange Rate I.11a and I.12a). The Indian Rupee depreciated vis-à-vis the US (ii) International Crude Oil Prices dollar during October 2024-March 2025, primarily Global crude oil prices have exhibited a reflecting the uncertainties due to disruptions declining trend with Brent crude falling from a in global trade, strengthening of the US dollar high of US$ 82 per barrel in early-October 2024 and capital outflows reflecting ‘flight to safety’. to an average of US$73 per barrel in March 2025. Going ahead, restrictive monetary policy by the Weak global demand conditions, sustained supply US Federal Reserve than what has been currently increase from OPEC+ and non-OPEC countries and factored in by the financial markets could further orderly resolution of geo-political conflicts will have lower the attractiveness of EME assets. Rising trade a potential dampening impact on crude oil prices. In protectionism, currency war threats, and higher this scenario, if crude oil prices drop by 10 per cent international crude oil prices are also some of the relative to the baseline, and in case of its full pass- factors that may exert downward pressure on the through to domestic product prices, inflation could Indian rupee. In this scenario, if INR depreciates be lower by around 30 bps with a boost of 15 bps by 5 per cent over the baseline, inflation could rise to India’s real GDP growth. In contrast, recovery in by around 35 bps while GDP growth could benefit 22 RBI Bulletin April 2025 tnec reP tnec reP Chart 1.11: Impact of Risk Scenarios on the Baseline Inflation Path a. Crude Oil Prices and Global Demand Shocks b. Exchange Rate and Food Price Shocks 6.0 5.0 4.0 3.0 2.0 Source: RBI staff estimates. 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 6.0 5.0 4.0 3.0 2.0 2024-25 2025-26 2026-27 Higher crude price Lower crude price Global growth recovery Global growth slowdown Baseline 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2024-25 2025-26 2026-27 Exchange rate depreciation Exchange rate appreciation Higher food inflation Lower food inflation BaselineMonetary Policy Report APRIL 2025 by around 25 bps through the trade channel in by around 50 bps over the baseline. On the other the short term. On the other hand, the Indian hand, sudden reversal in the prices of perishable economy exhibits continued resilience in growth food items and reduction of agricultural yields due with a stable inflation outlook and is expected to to adverse climatic conditions may exert upward contribute to revival of global demand conditions. pressure on food prices. These factors could lead to higher headline inflation by 50 bps as compared to These developments, along with faster resolution the baseline (Charts I.11b and I.12b). of trade protectionism and quicker than anticipated monetary policy easing by major economies, would I.5 Conclusion lead to strengthening of the Indian Rupee. In this Domestic economic activity is on a recovery scenario, if the INR appreciates by 5 per cent relative path and is expected to remain resilient backed by to the baseline, inflation and GDP growth could consumption demand. It needs to be recognised moderate by around 35 bps and 25 bps, respectively that India’s forte is its high growth potential and (Charts I.11b and I.12b). robust macroeconomic fundamentals. Government's push for consumption and capex, resilient services (iv) Food Inflation sector, robust outlook of agricultural sector aided by Food inflation witnessed moderation in strong corporate and bank balance sheets provide H2:2024-25 after scaling its peak in October 2024, impetus to the growth momentum, going forward. primarily driven by sharp seasonal correction in The measures announced in the Union Budget 2025- vegetable prices, lower cereals and pulses inflation 26 augur well for improving domestic consumption. and deflation in spices. Going ahead, food prices Moreover, the adherence to fiscal consolidation and may soften faster supported by robust kharif crop debt path without compromising on the quality production and likely bumper rabi arrivals. In of expenditure will help in improving sovereign such a scenario, headline inflation may moderate ratings, attracting capital inflows, easing financial RBI Bulletin April 2025 23 tnec reP tnec reP Chart 1.12: Impact of Risk Scenarios on the Baseline Growth Path a. Crude Oil Prices and Global Demand Shocks b. Exchange Rate and Food Price Shocks 8.0 8.0 7.0 7.0 6.0 6.0 5.0 5.0 4.0 4.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2024-25 2025-26 2026-27 2024-25 2025-26 2026-27 Higher crude price Lower crude price Exchange rate appreciation Exchange rate depreciation Global growth recovery Global growth slowdown Higher food inflation Lower food inflation Baseline Baseline Source: RBI staff estimates.APRIL 2025 Monetary Policy Report conditions, and improving overall sentiment and uncertainty posing new headwinds for global outlook. Well-coordinated fiscal and monetary policy growth and inflation. While India cannot remain working in tandem could undoubtedly generate immune to these developments, the progress improved outcomes in terms of better growth- achieved on the disinflation front gives headroom to inflation balance. The recent tariff announcements monetary policy to focus on balancing the growth- by US administration have hightened policy inflation outcome. 24 RBI Bulletin April 2025Monetary Policy Report APRIL 2025 muted, moving in a range of 3.5-3.8 per cent during September 2024 to January 2025, before firming up to 4.1 per cent in February 2025 (Chart II.1). Headline inflation has been marked by considerable volatility during H2:2024-25, engendered by overlapping The Reserve Bank of India (RBI) Act, 1934 food price shocks. As the impact of shocks receded, a sharp (amended in 2016) enjoins the RBI to set out deviations correction followed, resulting in headline inflation of actual inflation outcomes from projections, if any, declining below the target rate of 4 per cent by February and explain the underlying reasons thereof. The 2025. Core inflation pressures were muted in H2, though October 2024 MPR had projected inflation at 4.8 per February saw a notable pick-up. Industrial and farm input cent in Q3:2024-25 and 4.2 per cent in Q4:2024-25 costs remained subdued. Nominal rural wage growth stayed (Chart II.2). The deviations of the actual inflation elevated, driven by agricultural wages, while the organised outcomes from the projections were bi-directional sector staff cost growth decelerated. – with inflation being higher than projections in Movements in headline consumer price index Q3:2024-25 and lower than projections in Q4. The (CPI) inflation1 since August 2024 were marked by undershoot of projections by 80 basis points in Q3 considerable volatility engendered by overlapping arose primarily from an unanticipated transitory spike food price shocks that pushed up headline inflation in prices of tomatoes due to weather disruptions and above the upper tolerance threshold of 6 per cent a rapid pick-up in domestic edible oil prices due to in October 2024. As the impact of shocks receded, higher costs of imports. Thereafter, with vegetables a sharp correction followed, resulting in headline prices registering a sharper than anticipated winter inflation declining below the target rate of 4 per cent season price correction during January and February by February 2025. 2025, realised headline inflation at 3.9 per cent in Q4 Headline CPI inflation surged from 3.7 per cent in Chart II.1: CPI Inflation (y-o-y) August to 6.2 per cent by October 2024, propelled by a jump in food inflation owing to a spike in prices of vegetables, and oils and fats. In the ensuing months, as food inflation eased on correction in vegetable prices, headline inflation softened successively to 4.3 per cent in January 2025 and further to 3.6 per cent in February. Reflecting the volatility in food inflation, the contribution of the food and beverages group (with a weight of around 46 per cent in the CPI basket) to headline inflation fell from an elevated 74 per cent in October 2024 to 50 per cent in February 2025. Deflation in the fuel group persisted, though the rate of deflation moderated from (-)5.3 per cent in August 2024 to (-)1.3 per cent in February 2025. Core (CPI excluding food and fuel) inflation2 remained 1 Headline inflation is measured by year-on-year (y-o-y) changes in the all-India consumer price index (CPI) produced by the National Statistical Office (NSO). 2 Core CPI, i.e., CPI excluding food and fuel is worked out by eliminating the groups ‘food and beverages’ and ‘fuel and light’ from the headline CPI. RBI Bulletin April 2025 25 tnec reP 14 12 10 8 6 4.1 4 3.8 3.6 2 0 -1.3 -2 -4 -6 Headline Food and beverages Fuel and light CPI excluding food and fuel Target Tolerance band Sources: National Statistical Office (NSO); and RBI staff estimates. 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF II. Prices and CostsAPRIL 2025 Monetary Policy Report II.1 Consumer Prices The surge in headline inflation by 1.8 percentage points from 3.7 per cent in August 2024 to 5.5 per cent in September came from an uptick in price momentum3 along with sharp unfavourable base effects (1.1 percentage points). The headline CPI momentum quickened pace in October – primarily coming from a sharp increase in food prices – that firmed up headline inflation to 6.2 per cent, breaching the upper tolerance threshold, notwithstanding significant favourable base effects. Thereafter, with a sharp correction in the food price momentum, headline momentum began to register consecutive declines during November 2024-February 2025, resulting in a softening of headline inflation by 2.6 percentage points during this period to touch a low of 3.6 per cent in February. This decline so far (up to February) turned out to be 25 bps lower was despite a sharp pick-up in core (CPI excluding food than the projections set out in the October 2024 MPR. and fuel) momentum in February (Chart II.3). Chart II.3: CPI Inflation – Momentum and Base Effects a: CPI Headline M-o-m change Base effect Monthly change in y-o-y inflation Sources: NSO; and RBI staff estimates. 3 A change in CPI year-on-year (y-o-y) inflation between any two months is the difference between the current month-on-month (m-o-m) change in the price index (momentum) and the m-o-m change in the price index 12 months earlier (base effect). For more details, see Box I.1 of the MPR, September 2014. 26 RBI Bulletin April 2025 stniop egatnecreP stniop egatnecreP b: CPI Food and Beverages stniop egatnecreP c: CPI Fuel and Light stniop egatnecreP 2.0 1.0 0.0 -0.2 -0.5 -1.0 -0.7 -2.0 -3.0 d: CPI excluding Food and Fuel 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 4.0 2.0 0.0 -0.1 -1.6 -2.0 -1.8 -4.0 -6.0 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 5.0 4.0 3.0 2.0 1.0 0.1 0.2 0.0 0.1 -1.0 -2.0 -3.0 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 0.8 0.7 0.6 0.4 0.4 0.2 0.0 -0.2 -0.3 -0.4 -0.6 -0.8 tnec reP 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF Chart II.2: CPI Inflation (y-o-y): Projection versus Actual 8 7 6 5.6 5 4.8 4.1 4.2 4.2 3.9 4 3 2 1 0 Q2:2024-25 Q3:2024-25 Q4:2024-25* October 2024 MPR Path Actuals *:Projections for entire Q4:2024-25 vis-à-vis actual average inflation for January-February 2025. Sources: NSO; and RBI staff estimates.Monetary Policy Report APRIL 2025 The distribution of CPI inflation in 2024-25 in inflation across a few sub-groups. The pullback so far (April 2024-February 2025) vis-à-vis 2023-24 in inflation pressures across these sub-groups since indicates high positive skew and relatively higher December was also followed by a narrowing of the standard deviation, pointing to the outsized impact of inflation divergence across quantiles (Chart II.5). An continuing sectoral supply side shocks in engendering analysis of spatial inflation dynamics shows that the persistence of headline inflation (Chart II.4). The even with sharp swings in inflation due to supply pick-up in inflation during September-October was shocks, inflation across states has tended to converge also marked by widening of inflation divergence to the national average during the Flexible Inflation across CPI sub-groups, reflecting the sharp increase Targeting (FIT) period (Box II.1). Box II.1: Spatial Inflation Convergence in India The period since the 2020s has been characterised Combined Index as the measure of inflation across by persistent inflationary pressures due to multiple 35 Indian states and union territories spanning overlapping shocks. It has also raised concerns about October 2016 to December 20244 are used for the whether they have fundamentally altered spatial analysis. It is observed that the headline inflation dispersion across states has moderated over time inflation dynamics in India – in terms of its volatility and (Chart II.1.1). convergence over time – with its attendant implications for monetary policy and the credibility of the 4 per cent The spatial convergence properties are further examined CPI headline inflation target. by (a) panel unit root tests such as Levin-Lin-Chu and Against this backdrop, spatial convergence properties Im-Pesaran-Shin for stationarity, and (b) the beta (β) of overall CPI inflation since the implementation of FIT convergence analysis to ascertain whether states with in 2016 are examined, with a focus on the post-COVID higher initial differentials with the national inflation period. Monthly year-on-year (y-o-y) changes in the CPI level experienced a faster decline in inflation over time, (Contd.) 4 Data for April to June 2020 were front-filled using past CPI values to account for missing observations due to COVID-19 lockdowns. RBI Bulletin April 2025 27 ytisneD Chart II.4: Average CPI Inflation (y-o-y) (Kernel Density Estimates) 0.16 0.14 0.12 0.10 0.08 0.06 0.04 0.02 0.00 -20 -15 -10 -5 0 5 10 15 20 25 30 Inflation (per cent) Average (2017-18 to 2019-20) 2022-23 2023-24 2024-25 (Apr-Feb) Sources: NSO; and RBI staff estimates. tnec reP Chart II.5: CPI Sub-Group/Group Inflation Range (y-o-y) 12 10 8 6 4 2 0 -2 10th to 90th Percentile CPI Headline Target Sources: NSO; and RBI staff estimates. 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beFAPRIL 2025 Monetary Policy Report Chart II.1.1: Trend in Dispersion of CPI-Combined (y-o-y) Inflation across States Note: The imputed CPI prints for April and May 2020 have been regarded as a break in the CPI series. Sources: NSO; and RBI staff estimates. i.e., convergence to a common steady state. Accordingly, stationarity, i.e., supporting inflation convergence across a panel regression framework is used with the following states. Similarly, the results of the β-convergence test specification (1). using a pooled ordinary least square (OLS)6 regression framework show negative and statistically significant α β (1) it it–1 it beta coefficients for both FIT and post-COVID periods, WΔπhdeirfef = + iπ t diisff th +e εr ate of change in inflation confirming the existence of spatial inflation convergence differential of state i in period t with respect to the to the national level. Furthermore, the -convergence Δπdiff national level in the same period, is the one- it–1 test, which involves regressing the standard deviation period lagged inflation differential, β is the coefficient σ of inflation across states on a time trend, yields a πdiff measuring speed of convergence, and α and are the negative and significant coefficient, implying a decline in constant and error terms, respectively. Additionally, inflation dispersion over time, including the post-COVID ε the analysis performs (c) sigma ( )-convergence test, for period. The Phillips and Sul log-t test also indicates a testing the movements of the cross-sectional dispersion convergence for the FIT period, with the club convergence σ (standard deviation) of inflation5 over time; and (d) the test confirming the presence of a single club containing log-t and convergence club tests, for checking whether all all 35 states (Table II.1.1). These findings indicate an units converge to a single equilibrium or whether they ongoing convergence of inflation across states towards are divided into clusters or ‘clubs’ (presence of multiple the national average with lower dispersion despite the equlibria). impact of multiple adverse supply side shocks since The results for both panel unit root tests reject the early 2020, thereby indicating economic integration and null hypothesis of ‘panels contain unit roots’, implying anchoring of inflation expectations during FIT. (Contd.) 5 The standard deviation of inflation measure is constructed as , where is the inflation rate of state i in period t and is the national level headline inflation. 6 The Breusch and Pagan Lagrange Multiplier (LM) test for random effects fails to reject the nul l hypothesis that the variance of the panel-level effect across states is zero (p = 0.116), indicating that a pooled OLS regression is more appropriate. Robust and clustered standard errors are used to account for potential heteroskedasticity and serial autocorrelation. 28 RBI Bulletin April 2025 tnec reP 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 41-naJ 41-nuJ 41-voN 51-rpA 51-peS 61-beF 61-luJ 61-ceD 71-yaM 71-tcO 81-raM 81-guA 91-naJ 91-nuJ 91-voN 02-rpA 02-peS 12-beF 12-luJ 12-ceD 22-yaM 22-tcO 32-raM 32-guA 42-naJ 42-nuJ 42-voNMonetary Policy Report APRIL 2025 Table II.1.1: Results of Spatial Convergence Tests a. Panel Unit Root Tests Tests Statistic Null Hypothesis Levin–Lin–Chu unit-root test -12.021*** Panels contain unit roots Im–Pesaran–Shin unit-root test -11.634*** All panels contain unit roots b. Beta-convergence analysis Explanatory Variables FIT Post-COVID (October 2016 - December 2024) (June 2020 - December 2024) Lagged Inflation Differential -0.040*** -0.060*** (0.011) (0.009) Constant -0.083 -0.001 (0.247) (0.358) c. Sigma-convergence analysis Time Trend -0.002*** -0.007*** (0.0003) (0.0009) Constant 3.224*** 6.769*** (0.266) (0.656) d. Phillips and Sul log-t test log(t) -0.878 (0.829) t-stat -1.059 No. of clubs identified 1 (containing all 35 states) Note: Figures in parentheses indicate robust standard errors. *** and ** denote significance at 1% and 5% levels, respectively. Reference: Ray, S., Suganthi, D., Bhatia, S., & George, A. T. (2025). Spatial Inflation Convergence in India, mimeo CPI diffusion indices (DIs)7 strengthened while – for price increases in excess of 4 per cent as well as remaining in the expansionary zone from September 6 per cent on a month-on-month seasonally adjusted to December 2024. Following a dip in August, annualised rate (m-o-m saar) basis – continued to the headline CPI DI saw a steady sequential rise remain well below the 50-level mark, indicating that from September, largely driven by the goods sub- the extent of price increases across a majority of the component. Although remaining in the expansionary CPI items continued to remain muted (Chart II.6b). zone in January-February 2025, the headline CPI DI II.2 Drivers of Inflation declined sharply, signalling a slowdown in incidence A historical decomposition of inflation using a of price increases in the CPI basket. This moderation vector autoregression (VAR)9 model indicates that was primarily led by movements in CPI goods, while CPI services edged up (Chart II.6a). Threshold DIs8 the sharp moderation in inflation in Q4:2024-25 7 The CPI diffusion index, a measure of dispersion of price changes, categorises items in the CPI basket according to whether their m-o-m seasonally adjusted prices have risen, remained stagnant or fallen over the previous month. The higher the reading above 50, the broader is the expansion or generalisation of price increases; the further is the reading below 50, the broader is the price decline across items. 8 Threshold diffusion indices capture the dispersion of price increases in CPI basket beyond the specified month-on-month saar thresholds of 4 per cent and 6 per cent. 9 Historical decomposition estimates the contribution of each shock to the movements in inflation over the sample period (Q4:2010-11 to Q4:2024-25) based on a vector autoregression (VAR) with the following variables (represented as the vector Y) – crude oil prices (US$ per barrel); exchange rate (INR t per US$), asset price (BSE Sensex), CPI; the output gap; rural wages; the policy repo rate; and money supply (M). All variables other than policy repo rate 3 are y-o-y growth rates. The VAR can be written in reduced form as: Y c AY e; where et represents a vector of shocks. Using Wold decomposition, t t t Y can be represented as a function of its deterministic trend and sum of all the shocks e. This formulation facilitates decomposition of the deviation of int flation from its deterministic trend into the sum of contributions f r=o m + v ar iou–1 s + s hocks.t RBI Bulletin April 2025 29APRIL 2025 Monetary Policy Report Chart II.6: CPI Diffusion Indices (m-o-m seasonally adjusted) came from the reversal of supply side shocks seen in contribution of semi-perishables (non-durable goods Q3 (Chart II.7a). with a 30-day recall) to overall inflation declined in Q3 – driven primarily by softening of inflation in pulses Goods inflation (with a weight of 76.6 per cent and sugar even as personal care items remained sticky in overall CPI) contributed around 85 per cent of – it started firming up again in January-February 2025. headline inflation, on average, between September The contribution of durable items (goods with a 365- 2024 and January 2025, and services (with a weight of day recall) to overall inflation also edged up in January- 23.4 per cent) the remaining 15 per cent. In February February 2025 after remaining mostly steady during 2025, however, the contribution of goods to overall September-December 2024, reflecting the rising and inflation fell sharply to around 76 per cent following elevated price inflation in gold and silver. the large decline in CPI food inflation, while services contribution edged up (Chart II.7b). The contribution The contribution of imported components11 to of perishable items (non-durable with a 7-day recall10) headline inflation registered a sequential increase – which include vegetables, spices, fruits, and other since October and was at 21 per cent in February 2025 food items such as milk, meat and fish, and prepared (a contribution of 0.8 percentage points to the headline meals – jumped up in Q3:2024-25, contributing to inflation rate of 3.6 per cent) driven primarily by a the stickiness in headline inflation, before falling in pick-up in international prices of gold and silver, and January-February 2025. On the other hand, after the the depreciation of the rupee (Chart II.7c). 10 The CPI weighting diagrams use the modified mixed reference period (MMRP) data based on the 2011-12 Consumer Expenditure Survey conducted by the National Sample Survey Office (NSSO). Under MMRP, data are collected on expenditure incurred during the last seven days for frequently purchased items like edible oil, eggs, fish, meat, vegetables, fruits, spices, beverages, processed foods, pan, tobacco and intoxicants; expenditure incurred during the last 365 days for items like clothing, bedding, footwear, education, medical (institutional), durable goods; and expenditure incurred in the last 30 days for all other food, fuel and light, miscellaneous goods and services including non-institutional medical services, rents and taxes. 11 Global commodities that drive domestic prices include petroleum products; coal; electronic goods; gold; silver; chemical products; metal products; textiles; cereals; milk products, and vegetable oils – these together have a weight of 36.4 per cent in the CPI basket. 30 RBI Bulletin April 2025 xednI a: CPI Headline, Goods and Services CPI Headline CPI goods CPI services xednI b: CPI Headline by Thresholds 100 90 80 70 60 50 40 30 20 10 0 More than 4 per cent More than 6 per cent Sources: NSO; and RBI staff estimates. 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 100 90 80 70 60 50 40 30 20 10 0 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beFMonetary Policy Report APRIL 2025 Chart II.7: Drivers of CPI Inflation Sources: NSO; and RBI staff estimates. CPI Food Group with easing of price pressures in pulses, led to a substantial softening of food inflation to 3.8 per cent Food and beverages (weight of 45.9 per cent in by February 2025 (Chart II.8). the CPI basket) group exhibited high volatility in H2:2024-25 of 2024-25 so far. The month of September The food price build-up in 2024-25 so far (up to witnessed a resurgence of price pressures, which February) has been significantly lower than last year got further accentuated in October. Tight supply of and the historical levels. The drivers of food price vegetables caused by adverse weather conditions, build-up this year, however, have changed since last along with price pressures in oils and fats due to year. While oils and fats, fruits, prepared meals and increased import duties on crude and refined edible non-alcoholic beverages registered a higher price oils combined with rising international prices, led to build-up, those in pulses, cereals, sugar and eggs the surge in food inflation. Vegetable prices corrected were noticeably lower than last year. In contrast to sharply from November onwards with fresh crop last year, spices and vegetable prices, on average, arrivals and seasonal winter easing, which, along registered a substantial decline, although vegetables RBI Bulletin April 2025 31 stniop egatnecreP b: Contribution of Goods and Services stniop egatnecreP c: Contribution of Imported Inflation Domestically generated inflation Imported inflation CPI headline inflation (y-o-y, per cent) stniop egatnecreP )tnec rep( noitalfnI a: Decomposition of CPI Inflation* Oil price shock Exchange rate shock Asset price shock Supply shock Demand shock Policy rate shock Money supply shock Wage shock Inflation (y-o-y) (right scale) * Deviation from deterministic trend. Note: Estimated using a vector autoregression (see footnote 9 for details). Q4:2024-25 pertains to January-February 2025. Sources: NSO; RBI; Petroleum Planning & Analysis Cell (PPAC); BSE; Labour Bureau; and RBI staff estimates. 8 7 6 5 4 3.6 3 0.9 2 0 0. .7 9 1 1.2 0 -1 Services (23.4) Durable (10.5) Non-durable 30 days recall (31.3) Others* Non-durable 7 days recall (34.8) CPI headline inflation (y-o-y, per cent) * Represent balancing term between CPI item indices aggregated vertically and the published overall CPI index. Note: Figures in parentheses indicate weights in CPI. 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 10 8 6 4 3.6 2 2.8 0 0.8 -2 -4 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 4 8 3 7 2 6 1 5 0 4 -1 3 -2 2 -3 1 -4 0 61-5102:2Q 61-5102:3Q 61-5102:4Q 71-6102:1Q 71-6102:2Q 71-6102:3Q 71-6102:4Q 81-7102:1Q 81-7102:2Q 81-7102:3Q 81-7102:4Q 91-8102:1Q 91-8102:2Q 91-8102:3Q 91-8102:4Q 02-9102:1Q 02-9102:2Q 02-9102:3Q 02-9102:4Q 12-0202:1Q 12-0202:2Q 12-0202:3Q 12-0202:4Q 22-1202:1Q 22-1202:2Q 22-1202:3Q 22-1202:4Q 32-2202:1Q 32-2202:2Q 32-2202:3Q 32-2202:4Q 42-3202:1Q 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4QAPRIL 2025 Monetary Policy Report witnessed large intra-year price volatility. A softer from 6.9 per cent in October 2024 to 6.1 per cent in price build-up was also observed in meat and fish, February 2025 (Chart II.10). This softening primarily came from rice due to improved supply conditions and milk (Chart II.9). as reflected in higher production (6.7 per cent as Cereals inflation (weight of 9.7 per cent in the per the second advance estimate (AE) 2024-25 over CPI and 21.1 per cent in the food and beverages 2023-24) and higher mandi arrivals compared to the group) remained elevated, though it moderated previous year, despite easing of export restrictions 32 RBI Bulletin April 2025 tnec reP Chart II.9: Financial Year Price Build-up (February over March) 30 27.9 20 16.4 15.8 18.4 12.7 13.4 10 0 5.1 1.13.95.88. 41 .93. 39 .36.7 3.72.84.42.77.8 2.82.3 5.26.4 1.8 7.9 0.5 7.07.1 0.2 6.4 7.8 5.23.67.55.8 -1.4 -10 -4.2 -11.7 -20 2024-25 2023-24 Average (2011-12 to 2019-20) Note: Figures in parentheses indicate weights in CPI - food and beverages. Sources: NSO; and RBI staff estimates. )8.7( staf dna sliO )3.6( stiurF )1.12( slaereC )1.21( skcans ,slaem deraperP )7.2( segareveb cilohocla-noN )0.3( yranoitcefnoc dna raguS )4.41( kliM )9.0( ggE )9.7( hsif dna taeM )2.5( stcudorp dna sesluP )2.31( selbategeV )5.5( secipS segareveb dna dooF tnec reP Chart II.10: Cereals Inflation (y-o-y) 30 25 20 15 10 9.2 6.1 5 5.3 0 -5 -10 Cereals and products (9.7) Rice (4.4) Wheat/Atta (2.6) Note: Figures in parentheses indicate weights in CPI. Sources: NSO; and RBI staff estimates. 71-beF 71-guA 81-beF 81-guA 91-beF 91-guA 02-beF 02-guA 12-beF 12-guA 22-beF 22-guA 32-beF 32-guA 42-beF 42-guA 52-beF Chart II.8: CPI Food Inflation a: Drivers of CPI Food Inflation *: Includes meat & fish, egg, milk and pulses. **: Includes fruits, sugar, non-alocoholic beverages and prepared meals. Note: Figures in parentheses indicate weights in CPI food and beverages. Sources: NSO; and RBI staff estimates. stniop egatnecrep ni noitubirtnoC b: Drivers of CPI Food Momentum 12 10 8 6 4 3.8 2 0 -2 -4 Cereals and products (21.1) Protein-based food* (28.4) Vegetables (13.2) Others**(24.1) Oils and fats (7.8) Spices (5.5) CPI food and beverages (per cent, y-o-y) CPI food and beverages (per cent, m-o-m) 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 6 5 4 3 2 1 0 -1 -1.6 -2 -3 stniop egatnecrep ni noitubirtnoC 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beFMonetary Policy Report APRIL 2025 during September-October 2024. The comfortable Chart II.11: Drivers of Vegetables Inflation (y-o-y) buffer stocks of rice (8.7 times the norm as on March 16, 2025), along with the direct sale of rice to state governments, other government agencies, and continued retail sales, have aided in easing supply conditions and containing price pressures. Wheat inflation, on the other hand, hardened from 6.7 per cent in September 2024 to 9.2 per cent in February 2025 on tight supply conditions as reflected in lower mandi arrivals and low buffer stocks (0.9 times the norm as on March 16, 2025). In order to contain price pressures, supply management measures were Potato (16.3) Onion (10.7) implemented by the government, including the sale of Tomato (9.5) Garlic (5.1) 2.5 million tonnes of wheat through e-auctions under Cabbage and cauliflower (7.1) Other vegetables (51.3) Vegetables (y-o-y, per cent) the Open Market Sale Scheme (OMSS) till March 2025 Note: Figures in parentheses indicate items' weights in CPI-vegetables. at a fixed reserve price, downward revision of the Sources: NSO; and RBI staff estimates. existing stock limit in December 2024 and further in in February 2025 from 66.1 per cent in September February 2025, and continued restrictions on wheat 2024 – due to higher production (18.9 per cent as exports. Second AE of 2024-25 agricultural production per the first AE 2024-25 over 2023-24) and increased shows improved rabi wheat production (1.9 per cent late kharif arrivals even as export restrictions were increase over 2023-24). relaxed. To contain price pressures, the government Vegetables (weight of 6.0 per cent in the CPI released onions from its buffer stocks through and 13.2 per cent in the food and beverages group) open market sales at a subsidised rate of ₹35 per inflation reached a peak at 42.2 per cent in October kg across major consumption centres in September 2024, induced by multiple and overlapping weather 2024. Furthermore, a special train, Kanda Express, shocks, marking another year of volatile and elevated was initiated in October 2024 for faster distribution inflation. Thereafter, vegetables inflation declined from surplus to deficit states. Tomato prices, after sharply to (-)1.1 per cent by February 2025, aided by increasing sharply by 161 per cent on a y-o-y basis an unusually strong winter price correction during in October 2024 from a deflation of (-)47.9 per cent November 2024-February 2025 on account of robust in August 2024 on the back of lower mandi arrivals production and fresh market arrivals (Chart II.11). in southern states induced by unseasonal rainfall, corrected sharply recording a deflation of (-)28.5 per Among key vegetables, potato prices increased cent in February 2025 with improved supply. (on y-o-y basis) by an average of around 66.2 per cent during September-December 2024 on account of lower Within vegatables excluding TOP (tomato, production in 2023-24 [(-)5.0 per cent over 2022-23]. onion, and potato), garlic experienced persistently The steep price build-up due to lower production last elevated inflation, averaging around 75 per cent year, however, was corrected subsequently in January- during September-December 2024 due to modest February 2025, with increased production for 2024-25 production growth in 2023-24 (2.3 per cent over 2022- (4.4 per cent as per the first AE 2024-25 over 2023-24) 23, following a decline of (-)8.1 per cent in 2022-23 and higher market arrivals. Onion price increases also over 2021-22). Inflationary pressures in non-TOP moderated sharply on a y-o-y basis– to 30.4 per cent vegetables, thereafter, eased by February 2025, led RBI Bulletin April 2025 33 stniop egatnecrep ni noitubirrtnoC 45 35 25 15 5 -1.1 -5 -15 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beFAPRIL 2025 Monetary Policy Report Chart II.12 : Price build-up in CPI Vegetables by a sharp moderation in garlic prices on the back imports towards the end of the apple marketing of improved production (3.2 per cent growth as per season in India. After moderating during September- the first AE 2024-25 over 2023-24). Consequently, the December 2024, banana inflation increased sharply price build-up in both TOP and non-TOP categories in February 2025, largely reflecting an unfavourable remained higher than the historical pattern until base effect. Groundnut prices, however, remained December 2024. Thereafter, a sharp broad-based in deflation since August 2024 on account of higher kharif production (20.4 per cent as per the second AE correction in vegetable prices resulted in a marked 2024-25 over 2023-24). fall in the price build-up across TOP and non-TOP categories (Chart II.12). Inflation in fruits (weight of 2.9 per cent in the CPI and 6.3 per cent within the food and beverages group) remained elevated since August 2024. In February 2025, it surged to 14.8 per cent, the highest print since October 2014, driven by a pick-up in price pressures, compounded by an unfavourable base effect. The price build-up in fruits this year has been substantially higher than last year and its historical trend (Chart II.13). The price pressures were primarily driven by coconut on the back of tight supply conditions attributed to lower production across major coconut-growing states, coupled with high festive demand. Since December 2024, apple prices have also hardened, reflecting declining 34 RBI Bulletin April 2025 tnec reP a: CPI TOP* 2023-24 2024-25 Average (2015-16 to 2021-22) 2023-24 2024-25 Average (2015-16 to 2021-22) *: TOP denotes tomato, onion and potato. Sources: NSO; and RBI staff estimates. tnec reP b: CPI Vegetables excluding TOP 110 90 70 50 30 10 19.5 -10 rpA yaM nuJ luJ guA peS tcO voN ceD naJ beF raM 35 30 25 20 15 10 5 0 -5 -4.1 -10 tnec reP rpA yaM nuJ luJ guA peS tcO voN ceD naJ beF raM Chart II.13: Price build-up in CPI Fruits 14 12.2 12 10 8 6 4 2 0 Sources: NSO; and RBI staff estimates. rpA yaM nuJ luJ guA peS tcO voN ceD naJ beF raM 2022-23 2023-24 2024-25 Average (2015-16 to 2021-22)Monetary Policy Report APRIL 2025 Pulses, the primary source of plant-based protein Prices of animal-based protein items increased (weight of 2.4 per cent in the CPI and 5.2 per cent marginally during H2:2024-25, driven by milk and in the food and beverages group), which registered products, and eggs. On a y-o-y basis, price inflation in double digit inflation during April-August 2024, meat and fish (weight of 3.6 per cent in CPI and 7.9 witnessed sustained softening thereafter to (-)0.3 per cent in CPI food and beverages group) increased sequentially to an average of 5.3 per cent during per cent in February 2025 on higher production (2.8 December 2024-January 2025 before moderating to per cent for tur and 28 per cent for moong as per the 2.1 per cent in February 2025 on account of reduced second AE 2024-25 over 2023-24) and robust imports. demand for chicken due to bird flu in some states. Inflation in gram, however, remained elevated despite Eggs (weight of 0.4 per cent in CPI and 0.9 per cent in improved rabi production [4.5 per cent in 2024-25 the CPI food and beverages group) exhibited elevated as per the second AE over 2023-24 following (-)10.0 and volatile price movements, from an average of 6.5 per cent in 2023-24 over 2022-23]. On the whole, the per cent during April-September 2024 to 4.8 per cent price build-up in pulses remained lower during April in November 2024 before increasing to 6.9 per cent in 2024-February 2025 as compared to the previous year, December on account of strong winter demand and reflecting government interventions towards easing increased feed costs. In January-February 2025, egg supply conditions through the retail sale of subsidised inflation moderated on account of a sharp correction chana, moong and masur dals under the brand name in prices due to a mild winter and bird flu concerns Bharat dal and the extension of free import of yellow that reduced demand, coupled with a favourable base peas in stages till May 31, 2025, and tur till March 31, effect. Inflation in milk and products (weight of 6.6 2026 (Chart II.14). Relatedly, the stock-to-use ratio of per cent in the CPI and 14.4 per cent within the food 6.3 during September 2024-March 2025, in contrast to and beverages group) remained subdued at around 5.9 over the same period in 2023-24, is indicative of 2.9 per cent during September 2024-February 2025 on improving supply conditions of pulses (Chart II.15). account of lower input costs (Chart II.16). Chart II.15: Pulses Inflation and Stock-Use Ratio Sources: MOSPI; DGCI&S; CACP; Ministry of Agriculture; and RBI staff estimates. RBI Bulletin April 2025 35 tnec reP sennot hkaL 40 300 30 200 20 100 10 0 0 -100 -10 -200 -20 -30 -300 Stocks-to-use ratio Stock (right scale) CPI pulses inflation (per cent, y-o-y) 71-beF 71-guA 81-beF 81-guA 91-beF 91-guA 02-beF 02-guA 12-beF 12-guA 22-beF 22-guA 32-beF 32-guA 42-beF 42-guA 52-beF tnec reP Chart II.14: CPI Pulses and Products (Cumulative Financial Year Price Build-up) 20 15 10 5 0.4 0 2022-23 2023-24 2024-25 Average (2011-12 to 2017-18) Sources: NSO; and RBI staff estimates. rpA yaM nuJ luJ guA peS tcO voN ceD naJ beF raMAPRIL 2025 Monetary Policy Report Chart II.17: Edible Oil Prices: Domestic and Global CPI oils and fats Global oils and meals (right scale) Global palm oil (right scale) Sources: World Bank Pink Sheet; NSO; and RBI staff estimates. After recording 19 consecutive months of cane crushing season. However, lower estimated deflation, oils and fats (weight of 3.6 per cent in the kharif production [(-)4.0 per cent as per the second AE CPI and 7.8 per cent within the food and beverages 2024-25 over 2023-24] and partial removal of export group) price inflation increased from 2.5 per cent in restrictions, along with removal of restrictions on September 2024 to 16.4 per cent by February 2025. sugar diversion for ethanol production in August The sharp pick-up in edible oil prices was triggered 2024, pose upward risks to sugar prices. by a hike in basic customs duty on crude and refined Among other food items, deflation in spices edible oils by 20 percentage points in September 2024, deepened from (-)1.4 per cent in July 2024 to an average along with an uptick in international edible oil prices. of (-)7.4 per cent during November and December On a month-on-month basis, however, the rate of 2024, primarily driven by jeera and dry chillies, before price increases has softened since November 2024, narrowing to (-)5.8 per cent in February 2025. Inflation reflecting improved supply conditions on account in prices of prepared meals has witnessed a sequential of higher domestic production of oilseeds (8.4 per pick-up in H2 so far, though it remains contained. cent as per the second AE 2024-25 over 2023-24) and easing of global edible oil prices (Chart II.17). Within Retail Margins the oils and fats sub-group, ghee and butter price The absolute retail price margins, defined as the inflation remained broadly moderate, indicative of difference between retail and wholesale prices12 in the transmission of lower milk inflation. the case of cereals, remained steady during October Sugar and confectionery (weight of 1.4 per cent 2024-January 2025 before witnessing a marginal in the CPI and 3.0 per cent in the food and beverages deceleration in February-March 2025, reaching group) inflation moderated in 2024-25 so far on the ₹4.2 per kg, the lowest since December 2020. Retail back of higher stocks and fresh arrivals during the price margins of pulses edged up during October- 12 Item-level retail and wholesale prices are aggregated at respective subgroups using item-level CPI weights. Data for January-March 2021 have been excluded due to the changes in price collection mechanism and item varieties by DoCA. 36 RBI Bulletin April 2025 tnec rep ,y-o-Y tnec rep ,y-o-Y 20 80 15 60 10 40 5 20 0 0 -5 -20 -10 -40 -15 -60 -20 -80 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF Chart II.16: Drivers of Animal Protein Inflation (H2:2024-25 over H2:2023-24) stniop egatnecrep ni noitubirtnoC 0.3 0.2 0.7 0.2 0.1 0.0 -0.1 -0.2 -0.3 -0.4 0.3 -0.5 -0.6 -0.7 -0.8 -0.8 Meat and Egg (4) Milk and Animal fish (34) products (62) protein Note: Figures in parentheses indicate weights in CPI-animal protein group. H2:2024-25 refers to October 2024-February 2025. Sources: NSO; and RBI staff estimates.Monetary Policy Report APRIL 2025 Chart II.18: Retail, Wholesale Prices and Margin Sources: Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution; and RBI staff estimates. November 2024 but thereafter declined, hovering urban food inflation decreasing more than rural food around ₹9.2 per kg till February 2025 before a inflation (Chart II.19). marginal uptick to ₹9.3 per kg in March 2025. The retail price margins of edible oils witnessed a gradual uptick during October 2024-February 2025 due to firming up in the margins of all edible oils – soybean, sunflower, mustard, and refined oils. Thereafter, retail margins declined to ₹10.1 per kg in March 2025, with moderation in retail and wholesale prices of edible oils. In case of TOP vegetables, retail price margins registered a sequential decline since October 2024 and reached ₹5.7 per kg in March 2025, primarily driven by tomato and potato (Chart II.18). Sectoral and Spatial Distribution of Food Inflation The CPI food inflation pressures eased across both rural and urban areas since November 2024 with RBI Bulletin April 2025 37 )margolik rep ₹( ecirP )margolik rep ₹( nigraM c: Vegetables d: Edible Oils (Packed) Retail price margin (right scale) Retail price Wholesale price )margolik rep ₹( ecirP b: Pulses )margolik rep ₹( ecirP )margolik rep ₹( nigraM a: Cereals )margolik rep ₹( ecirP )margolik rep ₹( nigraM )margolik rep ₹( nigraM 45 6 42 39 5 36 33 4 30 27 3 24 21 2 18 15 1 71-raM 71-voN 81-luJ 91-raM 91-voN 02-luJ 12-raM 12-voN 22-luJ 32-raM 32-voN 42-luJ 52-raM 140 16 14 120 12 100 10 80 8 60 6 40 4 71-raM 71-voN 81-luJ 91-raM 91-voN 02-luJ 12-raM 12-voN 22-luJ 32-raM 32-voN 42-luJ 52-raM 50 12 40 10 30 8 20 6 10 4 0 2 71-raM 71-voN 81-luJ 91-raM 91-voN 02-luJ 12-raM 12-voN 22-luJ 32-raM 32-voN 42-luJ 52-raM 200 12 180 11 160 10 140 9 120 8 100 7 80 6 60 5 tnec reP 71-raM 71-voN 81-luJ 91-raM 91-voN 02-luJ 12-raM 12-voN 22-luJ 32-raM 32-voN 42-luJ 52-raM Chart II.19: CPI Food Inflation (y-o-y): Urban and Rural 12 10 8 6 4.0 4 3.4 2 0 Rural Urban Sources: NSO; and RBI staff estimates. 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beFAPRIL 2025 Monetary Policy Report 20 in the corresponding period a year ago. Sequentially, Table II.1: Distribution of food inflation across States/UTs: Number of states# however, there has been a considerable softening in food inflation pressures across states, with the Food Inflation Range 2023-24 2024-25 (Apr-Feb) (Apr-Feb) number of states experiencing food inflation in excess Less than 2 per cent 1 1 of 6.0 per cent reducing significantly – from a peak of Between 2 to 4 per cent 4 0 32 states in November 2024 to 05 states in February Between 4 to 6 per cent 11 12 2025 (Table II.1). Greater than 6 per cent 20 23 #Accounted for the unification of Daman and Diu with Dadra & Nagar CPI Fuel Group Haveli and the formation of Ladakh as a Union Territory (UT). Sources: NSO; and RBI staff estimates. CPI fuel remained in deflation in H2:2024-25 so Food inflation pressures during April 2024-February far, although the deflation moderated sharply from 2025 seem to have strengthened spatially, with the (-)5.3 per cent in August 2024 to an average of (-)1.5 number of states/UTs experiencing food inflation per cent during September 2024-February 2025. above 6.0 per cent on an average rising to 23 vis-à-vis Softer deflation in LPG due to unfavourable base Chart II.20: CPI Fuel Group Inflation Notes: 1. The international price for LPG is based on spot prices for Saudi Butane and Propane, combined in the ratio of 60:40 respectively. These international product prices are indicative import prices. Further details are available at www.ppac.org.in. 2. The indicative international price for kerosene is the Singapore Jet Kero spot price. 3. The domestic prices of LPG and kerosene represent the average prices of four and three metros, respectively, as reported by Indian Oil Corporation Limited (IOCL). 4. Figures in parentheses indicate item’s weights in CPI-fuel group. Sources: NSO; Bloomberg; IOCL; and RBI staff estimates. 38 RBI Bulletin April 2025 )gk 2.41( rednilyc rep ₹ c: LPG: Domestic and International Prices LPG - International LPG - Domestic ertil rep ₹ b: Kerosene: Domestic and International Prices Kerosene - International Kerosene - Domestic (subsidised) tnec reP a: Fuel Inflation (y-o-y) LPG (excl. conveyence) (18.8) Kerosene (8.0) Firewood, chips and dung cake (36.7) Electricity (33.0) (right scale) CPI fuel and light (right scale) 85 75 65 55 45 35 25 15 5 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 1200 1000 800 600 400 200 0 tnec reP 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 100 25 80 20 60 15 40 10 20 5 0 0 -20 -1.3 -5 -40 -10 32-naJ 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beFMonetary Policy Report APRIL 2025 effects, and that of kerosene due to a sharp pickup Table II.2: Exclusion-based Measures of in price momentum in December, along with a pick- Inflation (y-o-y) up in firewood and chips prices on a y-o-y basis, Period CPI excluding CPI excluding CPI excluding food led to the narrowing of deflation in CPI fuel in H2. food and fuel food fuel petrol fuel petrol diesel (47.3) diesel (45.0) gold silver (43.8) The movement of domestic kerosene prices largely Jan-24 3.5 3.7 3.4 mirrored international price movements. Domestic Feb-24 3.4 3.5 3.3 retail prices of LPG, however, remained unchanged Mar-24 3.3 3.4 3.2 during H2, despite a pick-up in international prices, Apr-24 3.2 3.4 3.0 contributing to its continuing deflation. Electricity May-24 3.1 3.3 2.8 Jun-24 3.1 3.3 2.8 prices, on a y-o-y basis, moved in a range-bound Jul-24 3.4 3.6 3.1 manner – rising to 5.4 per cent in September-October Aug-24 3.3 3.5 3.0 from 4.9 per cent in August – before edging down to Sep-24 3.5 3.8 3.2 5.3 per cent in February 2025 (Chart II.20). Oct-24 3.8 4.0 3.3 Nov-24 3.7 3.9 3.3 Core CPI (CPI excluding Food and Fuel) Dec-24 3.6 3.9 3.3 Jan-25 3.6 3.9 3.2 Core inflation (CPI excluding food and fuel) edged Feb-25 4.1 4.3 3.4 up from a low of 3.3 per cent in August 2024 to 3.8 per Notes: 1. Figures in parentheses indicate weights in CPI. cent in October and remained steady around 3.6 - 3.7 2. Derived as residual from headline CPI. Sources: NSO; and RBI staff estimates. per cent during November 2024-January 2025. In February 2025, core inflation picked-up to 4.1 per cent Core inflation across April 2024-February 2025 – the highest print in 15 months – driven primarily exhibited some signs of higher inflation variability by a sharp increase in gold prices. Exclusion-based when compared to the previous year, but the level measures of underlying inflation, which remove of inflation and its variability were much lower than volatile items such as petrol and diesel, gold and other post-COVID years (Chart II.22). Core inflation silver in addition to food and fuel, also remained pressures in 2024-25 so far, on an average, were muted till January before witnessing a notable uptick muted and broad-based, covering both core goods and in February, though of a lower magnitude (Table II.2). Exclusion-based CPI threshold DIs during September 2024-February 2025 point to the continuation of muted price pressures across the core CPI basket. CPI excluding food, fuel, petrol, diesel, gold and silver DI for price increases of greater than 4 per cent (m-o-m saar) remained in the contraction zone throughout H2, indicating that a majority of items exhibited price increases at a m-o-m saar of less than 4 per cent. The DI for price increases of greater than 6 per cent (m-o-m saar) also remained deep in the contractionary zone during September 2024-February 2025, indicating that most of the items in CPI core exhibited price increases below the 6 per cent m-o-m saar threshold during this period (Chart II.21). Though still in contraction zone, the month of February saw a notable uptick in threshold DIs. RBI Bulletin April 2025 39 xednI Chart II.21: CPI excluding Food, Fuel, Petrol, Diesel, Gold and Silver: Diffusion Indices by Thresholds (m-o-m seasonally adjusted) 100 90 80 70 60 50 40 30 20 10 0 More than 0 per cent More than 4 per cent More than 6 per cent Sources: NSO; and RBI staff estimates. 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beFAPRIL 2025 Monetary Policy Report The pick-up in core inflation between August Chart II.22: CPI Inflation excluding Food 2024 and February 2025 was largely contributed by and Fuel: Persistence the personal care and effects sub-group reflecting the spike in gold and silver prices. Notably, a significant portion of the increase also stemmed from the balancing item that accounts for statistical discrepancy13. Adjusted for the pick-up in gold and silver prices, and statistical discrepancies, the increase in core inflation has been low, with the modest contribution of housing, household goods and services, transport and communication, recreation and amusement, and health, somewhat offset by the 2020-21 (Jun-Feb) 2021-22 (Jun-Mar) decline in contribution of education, pan, tobacco and 2022-23 (Apr-Mar) 2023-24 (Apr-Mar) intoxicants and clothing and footwear to overall core 2024-25 (Apr-Feb) inflation (Chart II.24). Sources: NSO; and RBI staff estimates. Goods inflation arrived at by decomposing CPI services categories. Contribution of all sub-groups/ excluding food, fuel, petrol, diesel, gold, and silver groups (barring transport and communication, and inflation into its goods (with a weight of 20.7 per cent personal care and effects) were lower compared to in the headline CPI) and services (weight of 23.0 per previous years and pre-COVID patterns (Chart II.23). cent) components, remained broadly steady in H2 so 13 Due to divergence in CPI core computed as a residual from CPI headline net of CPI food and CPI fuel and those derived from an aggregation of CPI core sub-group indices. For further discussions on it see: Das and George (2023), ‘The aggregation method matters’, RBI Bulletin, March. 40 RBI Bulletin April 2025 noitaived dradnats lanoitces-ssorC 18 16 14 12 10 8 6 4 2 0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Inflation (y-o-y, per cent) Chart II.23: Contribution to CPI Inflation Chart II.24: Increase in CPI Core Inflation excluding Food Fuel (Percentage points) (Feb-25 over Aug-24): Contributions CPI excluding food fuel 4.8 (y-o-y, per cent) 3.5 4.3 of which Transport and communication 0.6 (18.2) 00 .. 43 Health (12.5) 00 .. 77 0.5 Clothing and footwear (13.8) 0.5 0.7 0.4 Housing (21.3) 0.8 1.3 0.6 Household goods and 0.3 0.3 services (8.0) 0.2 Personal care and effects (8.2) 0.4 0.6 0.8 Education (9.4) 00 .. 55 0.4 Others* (8.6) 00 .3.5 0.3 Memo 2.1 Core goods (51.3) 2.5 1.9 Core services (48.7) 1.8 2.6 1.6 Average (2017-18 to 2019-20) 2023-24 2024-25 (Apr-Feb) * Others include Pan, tobacco and intoxicants; and Recreation and amusement. * Others include the balancing item that accounts for statistical discrepancy. Note: Figures in parentheses indicate weights in CPI excluding food and fuel. Sources: NSO; and RBI Staff estimates. Sources: NSO; and RBI Staff estimates. stniop egatnecreP 0.21 4.08 0.48 0.05 0.03 0.02 0.01 0.01 0.00 0.00 -0.02 3.28 42-guA- )tnec rep ,y-o-y( leuf doof lcxe IPC stceffe dna erac lanosreP gnisuoH secivres dna sdoog dlohesuoH noitacinummoc dna tropsnarT tnemesuma dna noitaerceR htlaeH noitacudE raewtoof dna gnihtolC stnacixotnI dna occaboT ,naP )seicnapercsiD( *srehtO 52-beF- )tnec rep ,y-o-y( leuf doof lcxe IPC 4.3 4.1 3.9 3.7 3.5 3.3 3.1 2.9 2.7 2.5Monetary Policy Report APRIL 2025 Chart II.25: Contributions to CPI Inflation excluding Food, Fuel, Petrol, Diesel, Gold and Silver far (up to February 2025), albeit showing a marginal Other Measures of Inflation softening from 2.9 per cent in August-September CPI inflation for agricultural labourers (CPI-AL) 2024 to 2.8 per cent in October 2024, where it and rural labourers (CPI-RL) registered sequential remained steady at that level till February 2025. The moderation since September 2024. Moreover, the gap contribution of all sub-groups was also unchanged during this period (Chart II.25a). Core services Table II.3: Trimmed Mean Measures of Inflation inflation firmed up from 3.4 per cent in August 2024 (y-o-y) to 3.7 per cent in February 2025. A significant part of Month 5% 10% 25% Weighted trimmed trimmed trimmed Median the increase can be attributed to statistical aggregation Jan-24 4.7 4.5 3.9 3.7 effects14. Abstracting this, the pick-up in core services Feb-24 4.6 4.4 3.7 3.6 inflation was primarily driven by housing (house rent, Mar-24 4.7 4.4 3.6 3.3 Apr-24 4.6 4.2 3.5 3.0 residential building and land, water charges), health, May-24 4.5 4.2 3.4 2.9 household and transport and communication services Jun-24 4.3 3.9 3.4 2.9 Jul-24 3.8 3.7 3.3 3.0 (Chart II.25b). Aug-24 3.9 3.7 3.3 3.0 Trimmed mean measures15 of inflation remained Sep-24 4.4 3.9 3.5 3.0 Oct-24 4.6 4.1 3.5 3.0 muted in H2. While there were variations across Nov-24 4.6 4.1 3.5 3.2 months, all trimmed mean measures of inflation Dec-24 4.5 4.1 3.5 3.1 Jan-25 4.1 3.7 3.4 2.9 gradually softened from October 2024 to February Feb-25 3.7 3.5 3.2 2.9 2025 (Table II.3). Sources: NSO; and RBI staff estimates. 14 See footnote 13 for further details. 15 While exclusion-based measures drop a fixed set of volatile items (for example, food and fuel) in each period, trimmed measures exclude items located in the tails of the inflation distribution - items displaying changes more than the specified threshold in prices each month are excluded, and the items dropped differ from month to month. RBI Bulletin April 2025 41 stniop egnatnecrep ni noitubirtnoC a: Goods b: Services Personal care and effects Recreation and amusement Clothing and footwear Household goods and services Health Transport and communication Education Pan, tobacco and intoxicants Housing Others* Goods inflation (y-o-y, per cent) (20.7) Services inflation (y-o-y, per cent) (23.0) stniop egnatnecrep ni noitubirtnoC 8 7 6 5 4 3 2.8 2 1 0 -1 * Represent balancing item to reconcile divergence in CPI index between CPI items indices aggregated vertically, across items and the published sub-group/group/overall CPI index. Note: Figures in parentheses indicate weights in CPI. Sources: NSO; and RBI staff estimates. 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 8 7 6 5 3.9 4 3 2 1 0 -1 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beFAPRIL 2025 Monetary Policy Report between CPI-AL (and RL) with respect to CPI headline gross domestic product (GDP) picked up. GDP deflator inflation narrowed vis-à-vis last year on significant rose to 3.5 per cent in Q3 from 2.5 per cent in Q2 and moderation in food inflation in both CPI-AL and RL. CPI GVA deflator rose to 3.8 per cent in Q3 from 2.3 per inflation for industrial workers (CPI-IW), on the other cent in Q2 (Chart II.26a). hand, was below the headline CPI inflation during the Similar sub-groups/items across CPI and WPI also same period, primarily due to lower food inflation exhibited diverse inflation movements. While WPI and steeper fuel deflation in CPI-IW vis-à-vis headline inflation in food sub-groups such as cereals, pulses, CPI. Wholesale price index (WPI) inflation, year-on- fruits, oils and fats, and vegetables ruled above year, accelerated to 2.8 per cent in October 2024, corresponding CPI groups/subgroups, those in sugar, with food inflation touching a record peak of 12.1 per milk and egg prices were higher in the CPI than in the cent in more than a decade. Thereafter, following the WPI. Similarly, inflation in clothing, and pan, tobacco moderation in food inflation, WPI inflation softened and intoxicants was higher in the CPI measure vis- to 2.2 per cent in November. After registering an uptick à-vis the WPI. On the other hand, fuel and light to 2.6 per cent in December, WPI inflation has since recorded a deflation in both CPI and WPI, with CPI then moderated and remained within a narrow range showing a lower rate of decline. Likewise, petrol and of 2.3 to 2.4 per cent during January-February 2025, diesel recorded a lower rate of deflation in the CPI vis- as the softening in food inflation was offset by a pick- a-vis WPI (Chart II.26b). up in non-food manufactured products inflation and a II.3 Costs narrowing of deflation in the fuel group. With overall WPI recording a pick-up during Q3:2024-25, inflation Costs, as measured by WPI inflation in industrial measured by deflators for gross value added (GVA) and raw materials and farm inputs, stayed largely in Chart II.26: Alternative Measures of Inflation Sources: NSO; Labour Bureau; Office of Economic Adviser; and RBI staff estimates. 42 RBI Bulletin April 2025 tnec reP stniop egatnecreP a: Various Measures of Inflation (y-o-y) b: CPI-WPI Divergence : Select Commodities 10 10 (Average during Sep 2024-Feb 2025) 8 8 6 6 4 4 2 2 0 0 -2 -2 -4 -4 -6 -6 CPI-WPI gap (right scale) WPI CPI-IW CPI-AL Per cent CPI-RL CPI GVA deflator GDP deflator CPI WPI 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF Vegetables 24.1 28.7 Oils and fats 12.0 27.9 Fruits 9.9 13.1 Cereals and products 6 7.6 .5 Pulses and products 4. 68 .2 Egg 3.5 0.3 Milk and products 2.9 2.4 Clothing 2.8 1.7 Pan, tobacco and intoxicants 2.4 2.2 Footwear 12 .. 61 Sugar and confectionery 01 .9.7 Fuel and light -1.5 -3.0 Petrol -5.7-1.9 Diesel -2.0 -4.7 Spices -6.8 -5.2 -20 0 20 40Monetary Policy Report APRIL 2025 other contributory factors were non-food articles – particularly raw cotton and oilseeds – whose prices were mostly in deflation during this period. Mineral oils also remained in deflation, driven majorly by HSD, ATF, kerosene and petrol. In February 2025, however, industrial input costs increased and deflation in farm input costs decelerated with an increase in prices of furnace oil, naphtha, and paper and pulp products in the industrial sector and higher fodder and machinery costs in the agricultural sector. Minerals inflation, on the other hand, remained positive in H2:2045-25, primarily led by iron ore due to an increase in global iron ore prices on the back of higher Chinese demand and lower supply. Nominal rural wage growth averaged 6.3 per cent during October 2024-February 2025. While agricultural sector wages saw a sequential pick-up during this deflation since September 2024, primarily on account period, non-agricultural sector wage growth showed of electricity, fodder, aviation turbine fuel (ATF), high- a deceleration (Chart II.28). Agricultural wage growth speed diesel (HSD), and pesticides driven by easing was mainly driven by horticulture workers, inland international commodity prices (Chart II.27). The fishermen, picking workers, and ploughing and tilling Chart II.28: Wage Growth (y-o-y) and Inflation in Rural Areas (y-o-y) *: Comprise ploughing, sowing, harvesting, picking, horticulture workers, fishermen, loggers and wood cutters, animal husbandry, packaging, general agriculture labourers, plant protection workers. **: Comprise carpenter, blacksmith, mason, weavers, beedi makers, bamboo-cane basket weavers, handicraft workers, plumbers, electrician, construction workers, LMV & tractor drivers, sweeping/cleaning workers, and other non-agricultural labourers. Sources: NSO; Labour Bureau; and RBI staff estimates. RBI Bulletin April 2025 43 tnec reP 9 8 7.3 7 6 5.5 5 4 3 2 1 0 tnec reP 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF Chart II.27: Farm and Non-farm Input Cost Inflation (y-o-y) 25 20 15 10 5 2.4 1.4 0 -0.8 -5 -10 -15 Overall WPI Farm Inputs$ Industrial raw materials* *: Comprise primary non-food articles, minerals, coal, aviation turbine fuel, high speed diesel, naphtha, bitumen, furnace oil, lube oil, petroleum coke, electricity, cotton yarn and paper and pulp from WPI. $: Comprise high speed diesel, fodder, electricity, fertilisers, pesticides, and agricultural and forestry machinery from WPI. Sources: Office of Economic Adviser; and RBI staff estimates. 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beFAPRIL 2025 Monetary Policy Report Chart II.29: Staff Cost in Manufacturing and Services Note: The staff cost growth (y-o-y) is based on common set of companies. Sources: Capitaline database; and RBI staff estimates. workers; while that of non-agricultural wages was further along with higher growth in selling prices in on account of plumbers, electricians, and LMV and Q1:2025-26 (Chart II.30). tractor drivers in the rural sector. One year ahead business inflation expectations17, In the organised sector, staff cost growth (y-o-y) after firming up to 4.79 per cent in December 2024 decelerated for manufacturing and services sectors from 4.18 per cent in November, corrected sharply to in Q3:2024-25 as compared to the previous quarter, 4.24 per cent in January 2025 and softened further to driven by a decline in momentum of staff costs in 4.06 per cent in February 2025. The businesses polled both sectors assisted by favourable base effects in the survey perceived marginal softening in cost (Chart II.29). pressures. However, subdued sales figures resulted in muted expectations for profit margins compared On the assessment and outlook of cost conditions, to the previous round. manufacturing firms polled in the Reserve Bank’s enterprise surveys16 indicate that input cost pressures Manufacturing firms polled for the purchasing may soften in Q1:2025-26 but pressures from salary managers’ index (PMI) reported an uptick in input outgo are expected to accelerate. Manufacturing firms prices in Mar-25 after three months of consecutive also anticipate growth of selling prices to decelerate deceleration. Manufacturing sector saw a slowdown in in Q1 in tandem with lower input costs whereas for the rate of increase in output prices, during December services firms, the input and wage cost pressures 2024 to March 2025, though it continued to grow as well as selling prices are likely to pick up during at a faster pace as compared to input costs. On the Q1:2025-26. Infrastructure firms, on the other hand, other hand, PMI services sector continued to report expect input cost and wage cost pressures to rise relatively sticky input prices in March 2025. 16 Industrial Outlook Survey; and Services and Infrastructure Outlook Survey. 17 Based on the monthly Business Inflation Expectations Survey (BIES) of the Indian Institute of Management, Ahmedabad. The survey polls a panel of business leaders primarily from the manufacturing sector about their inflation expectations in the short and medium term. 44 RBI Bulletin April 2025 tnec reP tnec reP a: Manufacturing Sector b: Services Sector 14 5.7 6 12 10 7.7 5 8 6 4 4 2 3 0 -2 -4 2 -6 -8 1 Quarterly Momemtum Base Effect Staff cost growth (y-o-y) Staff cost/value of production (right scale) 22-12-4Q 32-22-1Q 32-22-2Q 32-22-3Q 32-22-4Q 42-32-1Q 42-32-2Q 42-32-3Q 42-32-4Q 52-42-1Q 52-42-2Q 52-42-3Q tnec reP tnec reP 30 40 25 35 20 26.2 30 15 25 9.3 10 20 5 15 0 10 -5 -10 5 -15 0 22-12-4Q 32-22-1Q 32-22-2Q 32-22-3Q 32-22-4Q 42-32-1Q 42-32-2Q 42-32-3Q 42-32-4Q 52-42-1Q 52-42-2Q 52-42-3QMonetary Policy Report APRIL 2025 The input-output price gap for the manufacturing while the increase in prices charged by the services sector indicates no pent-up pass-through with output sector remained softer vis-à-vis that of input prices price increase remaining sticky since October 2024, from September 2024 (Chart II.31). Chart II.31: PMI Input-Output Price Gap Sources: S&P Global; and RBI staff estimates. RBI Bulletin April 2025 45 paG xednI a: Manufacturing Sector )egnahc oN=05 ,detsujda yllanosaes( xednI paG xednI b: Services Sector )egnahc oN=05 ,detsujda yllanosaes( xednI 75 5 70 4 65 3 60 2 55 1 50 0 45 -1 40 -2 35 -3 Input prices Output prices Input prices Prices charged Input-output price gap (right scale) Input-output price gap (right scale) 32 naJ 32 raM 32 yaM 32 luJ 32 peS 32 voN 42 naJ 42 raM 42 yaM 42 luJ 42 peS 42 voN 52 naJ 52 raM 75 5 70 4 65 3 60 2 55 1 50 0 45 -1 40 -2 35 -3 32 naJ 32 raM 32 yaM 32 luJ 32 peS 32 voN 42 naJ 42 raM 42 yaM 42 luJ 42 peS 42 voN 52 naJ 52 raM Chart II.30: Expectations of Cost and Price Conditions a: Salary Outgo b: Cost of Inputs c: Selling Prices Manufacturing firms Services firms Infrastructure firms )tnec rep ni( esnopser teN 90 80 70 66.0 60 61.5 50 40 36.8 30 20 10 0 -10 -20 Note: ‘Net response’ is the difference between the percentage of respondents reporting an increase in prices and those reporting decrease. Sources: Reserve Bank’s Industrial Outlook Survey; Services & Infrastructure Outlook survey; and RBI staff estimates. noisnapxE noitcartnoC 22-1202:4Q 32-2202:1Q 32-2202:2Q 32-2202:3Q 32-2202:4Q 42-3202:1Q 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4Q 62-5202:1Q 90 80 71.1 70 69.2 60 50 40 40.1 30 20 10 0 -10 -20 22-1202:4Q 32-2202:1Q 32-2202:2Q 32-2202:3Q 32-2202:4Q 42-3202:1Q 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4Q 62-5202:1Q 90 80 70 60 62.1 55.8 50 40 30 20 10 12.5 0 -10 -20 22-1202:4Q 32-2202:1Q 32-2202:2Q 32-2202:3Q 32-2202:4Q 42-3202:1Q 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4Q 62-5202:1QAPRIL 2025 Monetary Policy Report II.4 Conclusion sector uncertainties, this could facilitate a durable alignment of headline inflation with the 4 per cent CPI headline inflation exhibited significant target and anchor inflation expectations effectively, volatility in H2:2024-25 due to food price shocks. thereby enhancing the credibility of monetary policy. Despite repetitive supply side shocks, pre-emptive The impact of the hike in trade tariffs by the US on monetary policy actions have helped to limit their domestic inflation outlook is uncertain at the moment. second-round effects on underlying inflation trends Following the tariff announcements, commodity and sustain the disinflation process. In this context, supply side measures have also played a role in prices, however, have seen sharp swings – while energy mitigating the impact of sectoral price shocks on and metal prices plunged, gold prices experienced general inflation trends. The significant softening in considerable volatility. Amidst large uncertainties CPI headline inflation in Q4:2024-25 so far, driven surrounding the global economic outlook, the by the sharp correction in food inflation, is likely considerable progress achieved on the disinflation to sustain on robust agricultural production. In front has provided greater leeway to monetary the absence of further adverse weather events and policy in effectively managing the growth-inflation negative spillovers from geopolitical and external balance. 46 RBI Bulletin April 2025Monetary Policy Report APRIL 2025 III. Demand and Output growth and services remained resilient, industrial growth was muted, on the back of deceleration in manufacturing activity. Domestic economic activity recovered in H2:2024-25 from Q2:2024-25, with consumption demand acting as III.1 Aggregate Demand the main driver. Improved prospects for agriculture and Aggregate demand conditions recovered as real rural economy, sustained buoyancy in services, gross domestic product (GDP) growth improved to government’s efforts to spur demand, and healthy balance 6.2 per cent (y-o-y)1 in Q3:2024-25 from 5.6 per cent sheets of banks and corporates brighten the outlook. The in the previous quarter (Table III.1 and Chart III.1a). recent tariff announcements by the US, on the other hand, The momentum of GDP – quarter-on-quarter (q-o-q) is likely to adversely impact India's net external demand. seasonally adjusted annualised rate (SAAR) – also Heightened trade policy uncertainties, geoeconomic recorded improvement as compared to the previous fragmentations, geopolitical tensions, volatility in global quarter (Chart III.1b). financial markets and weather disturbances pose downside risks to the domestic growth outlook. GDP Projections versus Actual Outcomes Domestic economic activity picked up in H2:2024- The Monetary Policy Report (MPR) of October 25 after slackening in Q2. Private consumption 2024 had projected real GDP growth at 7.0 per cent for remained robust, driven by strong rural demand Q2, and 7.4 per cent for both Q3 and Q4 of 2024-25. and improving urban demand, and government Actual growth in Q2 and Q3 turned out to be much final consumption expenditure picked up in H2. lower (Chart III.2), mainly on account of moderation Investment activity moderated vis-a-vis the highs of in investment on the back of lower government capital the previous years. Net external demand remained expenditure. Data for Q4 are scheduled to be released bouyant supported by resilient services exports. On by the National Statistical Office (NSO) on May 30, the supply side, while agriculture posted a strong 2025. Table III.1: Real GDP Growth (Y-o-y, per cent) Item 2023-24 2024-25 Weighted 2023-24 2024-25 Contribution* (FRE) (SAE) 2023-24 2024-25 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4# Private Final Consumption 5.6 7.6 3.2 4.3 7.4 3.0 5.7 6.2 7.7 5.9 6.9 9.9 Expenditure Government Final 8.1 3.8 0.8 0.4 5.3 20.1 2.3 6.6 -0.5 3.8 8.3 4.2 Consumption Expenditure Gross Fixed Capital Formation 8.8 6.1 3.0 2.1 8.4 11.7 9.3 6.0 6.7 5.8 5.7 6.4 Exports 2.2 7.1 0.5 1.5 -7.0 4.6 3.0 7.7 8.1 2.5 10.4 7.6 Imports 13.8 -1.1 3.3 -0.3 18.0 14.3 11.3 11.4 -0.7 -2.5 -1.1 -0.1 GDP at market prices 9.2 6.5 9.2 6.5 9.7 9.3 9.5 8.4 6.5 5.6 6.2 7.6 Notes: *: Component-wise contributions to growth do not add up to GDP growth because changes in stocks, valuables and discrepancies are not included. FRE: First revised estimates; SAE: Second advance estimates. #: Implicit Sources: National Statistical Office (NSO); and RBI staff estimates. 1 Unless specified otherwise, all discussions on growth in this chapter are on a year-on-year (y-o-y) basis. RBI Bulletin April 2025 47APRIL 2025 Monetary Policy Report Chart III.1: GDP Growth and its Constituents a: Weighted Contribution of the Components b: GDP Growth and Momentum to GDP Growth 16 18 12 12 e points 6 ent 8 entag Per c 4 erc 0 P 0 -6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4# 2022-23 2023-24 2024-25 -4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4# PFCE GFCE 2022-23 2023-24 2024-25 GFCF Net exports GDP (y-o-y, per cent) y-o-y growth q-o-q SAAR Notes: # Implicit; SAAR – Seasonally adjusted annualised rate. Sources: NSO; and RBI staff estimates. III.1.1 Private Final Consumption Expenditure vehicle sales posted positive growth in H2 so far Private final consumption expenditure (PFCE) (October-February) after contracting in Q2. Consumer – the mainstay of aggregate demand – revived and durables production expanded at a robust pace of 9.1 recorded a growth of 6.9 per cent in Q3:2024-25, per cent in Q3 and 7.2 per cent in January, indicating contributing 4.1 percentage points to overall GDP steady expansion in discretionary spending. Bank growth. Amongst the high frequency indicators (HFIs) credit to households grew in double digits, despite of urban consumption, domestic air passenger traffic the slowdown in unsecured personal loans and credit rose by a strong 11.4 per cent in Q3 and sustained cards outstanding. Fast Moving Consumer Goods its momentum in January-February 2025. Passenger (FMCG) sales volume growth showed improvement in Q3 and Jan-Feb 2025 for urban areas, despite lagging Chart III.2: GDP Growth - Projection versus Actual their rural counterpart (Table III.2). 8 7.4 Rural demand, supported by healthy crops 7.0 7 production and improved reservoir levels, gained 6.2 strength. Growth in FMCG sales volume in the 6 5.6 nt rural areas, which has been healthy in Q3 and Jan- e per c 5 Feb 2025, continued to outpace that of urban areas. n wth i 4 Tractor sales recorded upbeat growth in H2:2024- o gr 25 so far (October-February) after remaining muted o-y 3 Y- in H1. Fertiliser sales growth turned positive in Q3 2 and January 2025 after contracting in Q2. Motorcycle sales, however, inched down during H2:2024-25 so 1 far (Table III.2). 0 Q2:2024-25 Q3:2024-25 Private consumption in India shows a strong October 2024 MPR Projection Actual co-movement with GDP and adjusts fast for any Sources: NSO; and RBI staff estimates. divergence from shocks. The pace of convergence, 48 RBI Bulletin April 2025Monetary Policy Report APRIL 2025 Table III.2: Indicators of Consumption (Y-o-y, per cent) Indicators 2023-24 2024-25 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Jan Feb Urban Demand Domestic Air Passenger Traffic 19.1 23.0 9.1 5.2 5.6 7.2 11.4 14.1 12.1 Passenger Vehicle Sales# 9.6 5.8 8.7 10.8 3.4 -1.3 5.0 3.5 3.3 IIP Consumer Durables -2.7 1.1 5.3 11.2 10.7 6.6 9.1 7.2 Personal Loans 21.3 18.2 17.6 17.6 16.6 16.4 14.9 14.2 14.0 Vehicle Loans 23.0 21.2 19.7 17.6 14.9 13.3 8.8 9.7 9.6 Credit Card Outstanding 37.6 31.4 32.6 25.6 23.3 18.0 15.6 13.0 11.2 Rural Demand Tractor Sales -1.9 -5.8 -4.9 -22.9 0.5 0.7 13.5 11.4 35.9 Motorcycle Sales 13.8 -2.9 22.1 27.0 16.8 10.2 -1.9 -3.1 -12.9 IIP Consumer Non-durables 6.8 7.0 2.5 0.7 -0.2 -2.2 -1.8 -0.2 Fertiliser Sales -2.8 4.2 0.2 -7.4 5.5 -6.1 2.8 8.2 FMCG Sales Volume Rural 3.1 5.4 4.9 7.2 4.9 5.8 9.2 10.5 10.5* Urban 9.6 10.2 6.9 5.3 1.3 1.9 4.2 4.8 3.5* All-India 6.7 8.2 6.0 6.1 2.8 3.6 6.3 7.2 6.4* Note: *: Adjusted for leap year effect in February. #: Doesn't include Tata Motors data. Sources: Directorate General of Civil Aviation (DGCA), Society of Indian Automobile Manufacturers (SIAM); NSO; RBI; Tractor and Mechanization Association (TMA); and Ministry of Chemicals and Fertilisers (MoC&F); NielsenIQ’s Retail Audit Service; and RBI staff estimates. however, moderated during post-COVID as compared Employment conditions remained healthy in Q3:2024- with the pre-COVID period (Box III.1). 25, as reflected by the labour force participation Box III.1: Unravelling the Consumption Puzzle: Long-run Relationship and Post-shock Convergence with GDP The importance of private final consumption are corrected primarily through adjustments in expenditure (PFCE) in driving GDP growth is well- private consumption. This implies that following established as being the primary driver of aggregate an economic shock, PFCE responds more quickly to demand, directly influencing output (Keynes, 1936). In restore equilibrium. Moreover, comparing the results of pre-COVID period and full sample period (including India also, PFCE has remained the largest contributor COVID and post-COVID), it is found that the speed of to aggregate demand over the years. To investigate adjustments in private consumption was lower for the the relationship between PFCE and GDP in the Indian full sample period compared to the pre-COVID period, context, a co-integration technique is employed using possibly due to slowing response during the post- quarterly data spanning Q1:1996-97 to Q3:2024-25. COVID period in the face of heightened uncertainty. The results confirm a strong long-run relationship Nonetheless, these findings reinforce the critical role between PFCE and GDP. The short-term results of PFCE in shaping India’s economic trajectory and its indicate that deviations from the long-run equilibrium resilience in the face of external shocks. (Contd.) RBI Bulletin April 2025 49APRIL 2025 Monetary Policy Report Chart III.1.1: GDP and PFCE Growth (y-o-y) 30 8 6 20 4 10 2 0 0 -2 -10 -4 -20 -6 -30 -8 Table III.1.1: GDP and PFCE: Co-integration and Error Correction Estimates Pre-COVID (1998Q1 – 2019Q4) Long-Run Equation LN(GDP) 0.96*** (-53.53) Short-Run Equation D(LNPFCE) D(LNGDP) Error Correction Term -0.28*** -0.13 (-2.92) (-1.9) Adjusted R-squared 0.45 0.07 Full Sample (1998Q1 – 2024Q3) Long-Run Equation Ln(GDP) 0.98*** (-48.77) Short-Run Equation D(LNPFCE) D(LNGDP) Error Correction Term -0.19*** -0.06 (-3.06) (-1.37) Adjusted R-squared 0.77 0.83 Notes: (1) GDP and PFCE series are seasonally adjusted; (2) COVID-19 dummies are used to capture the substantial short-term disruptions caused by the pandemic, with negative effects observed during the initial quarters of 2020, followed by partial recovery in subsequent periods; (3) Trace test and max-eigenvalue test indicates cointegrating relationship at 5 per cent level of significance; (4) Figures in parentheses are t-statistics; (5) *** denotes significance at 1 per cent level. Sources: NSO; and RBI staff estimates. References: 1. Engle, R. F., & Granger, C. W. J. (1987). Co-integration and Error Correction: Representation, Estimation, and Testing, Econometrica. 55(2), 251-276. 2. Johansen, S. (1988). Statistical Analysis of Cointegration Vectors, Journal of Economic Dynamics and Control. 12(2- 3), 231-254. 3. Keynes, J. M. (1937). The General Theory of Employment, The Quarterly Journal of Economics. 51(2), 209-223. 50 RBI Bulletin April 2025 tnec reP 1Q:31-2102 3Q:31-2102 1Q:41-3102 3Q:41-3102 1Q:51-4102 3Q:51-4102 1Q:61-5102 3Q:61-5102 1Q:71-6102 3Q:71-6102 1Q:81-7102 3Q:81-7102 1Q:91-8102 3Q:91-8102 1Q:02-9102 3Q:02-9102 1Q:12-0202 3Q:12-0202 1Q:22-1202 3Q:22-1202 1Q:32-2202 3Q:32-2202 1Q:42-3202 3Q:42-3202 1Q:52-4202 3Q:52-4202 stniop egatnecreP GDP less PFCE (RHS) GDP PFCE Sources: NSO; and RBI Staff Estimates.Monetary Policy Report APRIL 2025 Table III.3: Employment Situation in India (Per cent) Indicators 2023-24 2024-25 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Labour Force Participation Rate 48.8 49.3 49.9 50.2 50.1 50.4 50.4 Worker Population Ratio 45.5 46 46.6 46.9 46.8 47.2 47.2 Unemployment Rate 6.6 6.6 6.5 6.7 6.6 6.4 6.4 Net Payroll Additions in EPFO Records (y-o-y) -9.2 -0.6 12.5 22.7 7.8 -3.4 4.2 Sources: NSO; and Employees’ Provident Fund Organisation (EPFO). rate (LFPR) and the employment rate (ER) under recorded improvement in January 2025. Among the urban Periodic Labour Force Survey (PLFS). the coincident indicators of construction activity, The unemployment rate in urban areas remained both steel consumption and cement production at 6.4 per cent in Q3, the lowest in the PLFS series. reverted to double-digit growth in Jan-Feb 2025. Steel consumption, however, contracted marginally Strengthening of formal employment was evident in in March 2025 (Table III.4). the Employees’ Provident Fund Organisation (EPFO) payrolls data – net payroll additions rose by 4.2 per Capacity utilisation (CU) in the manufacturing cent in Q3 as compared with a contraction in the sector2 increased to 75.4 per cent in Q3:2024-25 from previous quarter (Table III.3). 74.7 per cent in the same quarter of the previous year. Seasonally adjusted capacity utilisation at 75.3 per III.1.2 Gross Fixed Capital Formation cent was well above the long-term average of 73.8 per Gross fixed capital formation (GFCF) expansion cent3 (Chart III.3). Robust capacity utilisation act as an at 5.7 per cent in Q3:2024-25 was lower as compared important driver in boosting private investment (Box to 9.3 per cent in the same period last year. In Q4, III.2). Since the level of CU has been above the long amongst the key underlying indicators, import of period trend over the last few quarters, heightened policy uncertainty may be acting as a dampening force capital goods expanded by 7.5 per cent in Jan-Feb for revival in private capex. 2025, led by electronic goods, electrical and non- electrical machinery, iron and steel, and machine The interest coverage ratio (ICR)4 of listed tools. Domestic production of capital goods private manufacturing companies remained Table III.4: Indicators of Investment Demand (Y-o-y, per cent) Indicators 2023-24 2024-25 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Jan Feb Mar Import of Capital Goods 9.2 9.6 5.6 8.9 10.0 11.7 6.0 15.5 -0.5 IIP: Capital Goods 5.1 8.8 7.5 4.1 3.0 4.9 7.3 7.8 Finished Steel Consumption 12.1 17.7 14.7 10.4 15.0 12.0 7.8 10.9 10.9 -0.5 Cement Production 12.7 10.3 5.1 7.6 0.4 3.2 6.7 14.5 10.5 Sources: Directorate General of Commercial Intelligence and Statistics (DGCI&S); NSO; Joint Plant Committee; and Office of Economic Adviser. 2 Based on RBI’s survey of order books, inventories and capacity utilisation (OBICUS). 3 Long term average is for the period Q1:2008-09 to Q3:2024-25 excluding Q1:2020-21. 4 Interest coverage ratio is the ratio of earnings before interest and taxes (EBIT) to interest expenses and measures a company’s capacity to make interest payments on its debt. The minimum value for a viable ICR is 1. RBI Bulletin April 2025 51APRIL 2025 Monetary Policy Report comfortable in Q3:2024-25, indicating improved debt servicing capacity which, in conjunction with easing financial conditions, augers well for expansion in capacity. Within the services sector, ICR of non-IT companies improved during Q3 while ICR of IT companies remained at elevated levels despite moderation (Table III.5). The investment rate5 at 31.4 per cent in 2023-24 moderated from the previous year level (32.6 per cent). On the other hand, domestic savings rate remained steady at 30.7 per cent of GDP in 2023-24, indicating lower reliance on external funding (Chart III.4). Net household financial savings improved marginally CU CU (Seasonally adjusted) to 5.2 per cent of GDP from 5.0 per cent last year, Long-term average mainly due to uptick in financial assets of households (Table III.6). Box III.2: Investment Dynamics through the Lens of Capacity Utilisation The public sector played a major role in the post- cycle with healthy balance sheets and easing of financial pandemic revival of gross fixed investments while the conditions. The dynamic relationship between capacity private corporate sector has been lagging, which is pivotal utilisation and private investments is empirically in expanding the productive capacity of the economy explored to find out the threshold level of capacity (IMF, 2025). The capacity utilisation (CU) level is a vital utilisation that triggers investment. indicator to understand whether fresh investments by A structural vector auto-regression (SVAR) model is the private corporate sector will get triggered to meet estimated using five variables6 viz., business expectation, the improving domestic demand conditions. Capacity CU, gross fixed investments, inflation (GFCF deflator) utilisation in the manufacturing sector in the recent and repo rate for the period Q2:2008-09 to Q3:2024- period has been higher than its long-term average. It 25. Since uncertainty is believed to dampen current is generally understood that a high level of capacity and future investments, it is included as an exogenous utilisation coupled with a positive economic outlook variable7. Empirical findings suggest that around 50.0 incentivises fresh capacity additions. An improvement per cent of the variation in private investment growth is in productivity, however, may lead to a lower level of explained by CU, suggesting its dominant role as a driver capacity utilisation. Thus, examining the threshold level of private investments (Chart III.2.1). Economic policy of capacity utilisation assumes importance; particularly, uncertainty is found to have a dampening effect on fresh at the current juncture when the environment seems investments. The threshold level of CU, which might to be conducive for a turnaround in the private capex trigger private corporate investment going forward, (Contd.) 5 Ratio of Gross Capital Formation to GDP at current prices. 6 Business expectation index is as per the quarterly Industrial Outlook Survey (IOS) conducted by the Reserve Bank of India; CU is as per the quarterly Order Book, Inventory and Capacity Utilisation Survey (OBICUS) conducted by the Reserve Bank; quarterly gross fixed capital formation by the private corporate sector derived from the annual estimates using econometric method. 7 Uncertainty is measured by the economic policy uncertainty index for India published by Baker, Bloom and Davis. 52 RBI Bulletin April 2025 tnec reP Chart III.3: Capacity Utilisation in Manufacturing 80 75.4 75 73.8 75.3 70 65 60 55 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2021-22 2022-23 2023-24 2024-25 Source: RBI staff estimates.Monetary Policy Report APRIL 2025 is estimated with the same set of variables but using (Balke, 2000). The findings suggest a band of 72.4 to 74.4 an alternative specification of Threshold VAR models per cent as a threshold level for CU. References: 1. IMF (2025). India 2024 Article IV Consultation, International Monetary Fund Country Report No. 25/54. 2. N. Balke (2000). Credit and Economic Activity: Credit Regimes and Nonlinear Propagation of Shocks, The Review of Economics and Statistics. 82(2), 344-349. III.1.3 Government Consumption in Q3:2024-25 (Chart III.5). GFCE growth for 2024-25, however, fell to 3.8 per cent as compared to 8.1 per Government final consumption expenditure cent in the previous year. (GFCE) posted a sharp recovery in Q3:2024-25, rising by 8.3 per cent, following a subdued growth of just 1.6 per cent in H1, mainly due to the model code of conduct during the general elections. Notably, union government’s revenue expenditure, excluding interest payments and major subsidies, grew by 11.2 per cent, and capital outlay surged by 20.5 per cent Table III.5: Interest Coverage Ratio (Ratio) Sector 2023-24 2024-25 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Manufacturing 6.8 7.5 7.4 7.5 7.9 7.9 7.6 Services (non-IT) 1.6 1.4 1.8 1.7 1.8 1.7 2.1 IT 44.5 43.2 41.2 44.1 42.9 45.6 40.9 Note: Data for Q3:2024-25 are based on results of 2,924 listed non- government non-financial companies. Source: RBI staff estimates. RBI Bulletin April 2025 53 PDG fo tnec reP Chart III.4: Saving-Investment Gap 40 38 36 34 32 31.4 30.7 30 28 26 24 Savings rate Investment rate Sources: NSO; and RBI staff estimates. 21-1102 31-2102 41-3102 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 42-3202 Chart III.2.1: Variance Decomposition of GFCF Growth tnec reP 100 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Quarters Inflation Policy rate Business Expectation Capacity Utilisation GFCF growth Sources: NSO; and RBI Staff Estimates.APRIL 2025 Monetary Policy Report Table III.6: Domestic Savings (Per cent of GDP) Sector 2011-12 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 to 2015-16 Households Physical (1) 13.3 10.7 11.6 12.4 11.4 11.0 12.8 13.7 13.0 Savings Gross Financial Assets (2) 10.6 10.5 12.0 12.0 11.6 15.4 11.1 10.9 11.4 Gross Financial Liabilities (3) 3.1 3.0 4.4 4.1 3.9 3.7 3.8 5.9 6.2 Net Financial Savings (4=2-3) 7.5 7.4 7.6 7.9 7.7 11.7 7.3 5.0 5.2 Total Household Savings (5=1+4) 20.8 18.1 19.3 20.3 19.1 22.7 20.1 18.6 18.1 Private Corporate Savings (6) 10.8 10.8 11.5 11.2 10.5 10.2 10.5 11.2 11.0 Public Savings (7) 1.2 1.2 1.7 1.6 0.9 0.2 -4.1 -0.1 1.1 Gross Domestic Savings (5+6+7) 32.8 32.8 31.3 32.1 31.7 29.6 29.1 31.2 30.7 Note: Physical saving comprises saving in physical assets and saving in the form of gold and silver ornaments. Source: NSO. The central government’s revenue expenditure government’s fiscal consolidation in 2025-26 (BE) has (excluding interest payments and major subsidies) been planned largely by rationalisation in revenue grew by 7.9 per cent, while capital expenditure expenditure, while maintaining a thrust on capital expanded by 7.3 per cent during 2024-25 (RE). Pursuing expenditure which has been budgeted at 3.1 per cent fiscal consolidation, the central government’s gross of GDP. Gross tax revenues are projected to rise to 12.0 fiscal deficit (GFD) at 4.7 per cent of GDP in 2024- per cent of GDP in 2025-26 (BE) from 11.6 per cent 25 (RE) was 20 basis points lower than its budget in 2024-25 (RE) (Table III.7). The revenue expenditure estimate, and 75 basis points lower compared to the Table III.7: Central Government Finances previous year. The centre’s GFD for 2025-26 has been (Per cent of GDP) budgeted at 4.4 per cent of GDP, which is consistent Indicator 2022-23 2023-24 2024-25 2025-26 (RE) (BE) with the medium-term goal of reducing the GFD-GDP 1. Gross tax revenue 11.4 11.5 11.6 12.0 ratio to below 4.5 per cent by 2025-26. The central 2. Revenue receipts 8.9 9.1 9.3 9.6 a. Tax revenue (Net) 7.8 7.7 7.7 7.9 b. Non-tax revenue 1.1 1.3 1.6 1.6 3. Non-debt capital receipts 0.3 0.2 0.2 0.2 4. Revenue expenditure 12.8 11.6 11.2 11.0 a. Interest payments 3.5 3.5 3.4 3.6 b. Major subsidies 2.0 1.4 1.2 1.1 5. Revenue expenditure excluding interest 7.4 6.7 6.6 6.4 payments and major subsidies 6. Capital expenditure 2.8 3.2 3.1 3.1 7. Capital outlay 2.3 2.6 2.6 2.5 8. Effective capital 3.9 4.2 4.0 4.3 expenditure 9. Total expenditure 15.6 14.8 14.2 14.2 10. Gross fiscal deficit 6.5 5.5 4.7 4.4 11. Revenue deficit 4.0 2.5 1.8 1.5 12. Primary deficit 3.0 2.0 1.3 0.8 Notes: RE: Revised Estimates; BE: Budget Estimates. Effective capital expenditure includes grants in aid for creation of capital assets. Figures may vary from those published in the Union Budget due to revision in GDP. Sources: Union Budget 2025-26; and RBI staff estimates. 54 RBI Bulletin April 2025 tnec rep ni htworg y-o-Y Chart III.5: Central Government's Revenue Expenditure and Capital Outlay during 2024-25 50 40.0 40 30 20.5 20 14.6 11.2 12.5 7.2 10 0 -1.5 -10 -20 -30 -40 -35.4 Q1 Q2 Q3 Q4# Revenue expenditure excluding interest payments and major subsidies Capital outlay Note: #: Implicit Sources: Controller General of Accounts (CGA); and Union Budget 2025-26.Monetary Policy Report APRIL 2025 Chart III.6: Central Government’s Tax Collections: April-February a: Direct Taxes b: Indirect Taxes c: GST Collections (Centre plus States) Sources: CGA; Ministry of Finance (MoF); and GST Portal. to capital outlay ratio (RECO), a key indicator of the the states have continued their thrust on augmenting quality of expenditure, stood at 4.4 in 2025-26 (BE), capital expenditure, with a budgeted increase of 22.4 same as in the last two years and the lowest in over per cent in 2024-25. three decades. State’s GFD reached 61.3 per cent of their BE During April-February 2024-25, the central during April-January 2024-25, lower than the level government's revenue expenditure excluding interest recorded in the previous year (Chart III.7a). Total and major subsidy payments increased by 3.9 per revenue receipts for the states remained buoyant cent, whereas capital expenditure witnessed muted during April-January 2024-25, driven primarily by a growth of 0.8 per cent. The central government’s strong rise in tax revenue, although growth in non- gross tax revenue recorded a growth of 10.9 per cent, tax revenue moderated. On the expenditure side, supported by buoyant direct tax collections. Direct capital spending contracted marginally by 0.6 per taxes increased by 13.3 per cent with income tax cent during April-January 2024-25, while growth in expanding by 22.0 per cent. Indirect tax collections revenue expenditure accelerated during this period rose by 7.9 per cent, with goods and services tax (Chart III.7b). (GST) and custom duties registering a growth of 11.6 and 4.2 per cent, respectively. Monthly average GST Table III.8: State Government Finances - Key Fiscal collections (centre plus states) was ₹1.84 lakh crore Indicators (per cent of GDP) during 2024-25, registering a growth of 9.4 per cent Items 2022-23 (A) 2023-24 (PA) 2024-25 (BE) over the previous year (Chart III.6). Revenue deficit 0.2 0.2 0.2 The aggregate gross fiscal deficit (GFD) for the Gross fiscal deficit 2.7 2.9 3.2 states and union territories has been estimated at 3.2 Primary deficit 1.0 1.4 1.5 per cent of GDP for 2024-25 (BE) (Table III.8). The states Notes: Data pertains to 31 States/UTs A: Actuals; PA: Provisional Accounts; BE: Budget Estimates have projected a rise in revenue receipts 2024-25 (BE), Sources: Budget Documents of States/UTs; and Comptroller and Auditor fuelled by both tax and non-tax components. Notably, General (CAG) of India. RBI Bulletin April 2025 55 erorc dnasuoht ₹ erorc dnasuoht ₹ erorc dnasuoht ₹ 1,400 225 1,200 200 1,000 935 175 773 837 800 150 600 125 400 100 269 254 250 75 200 189 196 205 50 0 2022-23 2023-24 2024-25 25 0 rpA yaM nuJ luJ guA peS tcO voN ceD naJ beF raM 2,000 1,800 1,600 1,400 991 1,200 812 1,000 646 800 600 400 753 767 642 200 0 GST (including compensation cess) 2022-23 2023-24 2024-25 Union excise duties Corporation tax Income tax Customs duties Other taxes Other taxes 2022-23 2023-24 2024-25APRIL 2025 Monetary Policy Report Chart III.7: Key Fiscal Indicators of the States: April-January a: Fiscal Indicators b: Growth in Receipts and Expenditure 120 35 32.1 100 97.5 30 Per cent) 80 92.6 n per cent 22 05 19.7 Share in BE ( 46 00 35.6 49.763.161.3 53.9 48.9 Y-o-y growth i 11 05 5 7.111.5 12.3 8.812.2 8.9 20 15.8 0 -0.6 -5 0 Revenue Revenue Capital Revenue deficit Gross fiscal Primary deficit receipts expenditure expenditure deficit 2022-23 2023-24 2024-25 2022-23 2023-24 2024-25 Note: Data pertains to 21 States Sources: Budget Documents of State Governments; and CAG. The rise in revenue expenditure along with the totalling ₹1,22,180 crore as of January 31, 2025, of contraction in capital outlay has diluted the quality which, about ₹1,10,792 crore has been disbursed.8 of state spending (Chart III.8). The states’ capital The scheme has been extended to 2025-26 in the expenditure has been supported by the Scheme for Union budget, recognising its critical role in fostering Special Assistance to States for Capital Investment. investment and growth. Under this initiative, the centre has approved loans Chart III.8: Revenue and Expenditure of States: April-January a: Components of States' Own Tax Revenue b: Capital Expenditure of States 30 3.5 10.0 25.5 nt 25 3.0 2.8 8.0 e per c 20 17.4 2.5 7.1 y growth in 11 05 14.3 13.2 14.6 11.3 8.0 Per cent 12 .. 50 46 .. 00 Ratio o- Y- 4.8 1.0 5 2.0 0.5 0 -1.3 0.0 0.0 -5 2021-22 2022-23 2023-24 2024-25 SGST Sales tax/VAT State excise Capital outlay as per cent of GDP (Full year) 2022-23 2023-24 2024-25 Revenue expenditure to capital outlay (RHS) Note: Data for revenue expenditure to capital outlay (RECO) ratio pertain to 21 States. Data for capital outlay as per cent of GDP pertains to all States/UTs and data for 2024-25 is a Budget Estimate. Sources: CAG; and RBI. 8 Lok Sabha Unstarred Question No. 1080, available at https://sansad.in/getFile/loksabhaquestions/annex/184/AU1080_mHyVcX.pdf?source=pqals 56 RBI Bulletin April 2025Monetary Policy Report APRIL 2025 Table III.9: Government Market Borrowings (₹ crore) 2022-23 2023-24 2024-25 Centre States Total Centre States Total Centre States Total Net borrowings 11,08,261 5,18,830 16,27,091 11,80,456 7,17,140 18,97,596 10,39,275 7,53,345 17,92,620 Gross borrowings 14,21,000 7,58,392 21,79,392 15,43,000 10,07,058 25,50,058 14,00,697 10,73,310 24,74,007 Sources: Government of India (GoI); and RBI staff estimates. In 2024-25, the centre’s gross market borrowings merchandise trade deficit widened to US$115.8 billion amounted to ₹14.01 lakh crore, marginally lower than during H2:2024-25 (October-February) from US$ 106.6 the budgeted estimates. In pursuit of active debt billion in the corresponding period of the previous consolidation, the Reserve Bank of India conducted year (Chart III.9). The contraction in merchandise eight switch auctions on behalf of the central exports during H2 was primarily driven by petroleum, government, totalling ₹1.47 lakh crore. These auctions oil and lubricants (POL), gems and jewellery, iron ore, involved substituting shorter-maturity securities with organic and inorganic chemicals, and oil meals, while those of longer maturities. The weighted average yield electronic goods, engineering goods, rice, readymade on issuances during 2024-25 declined to 7.0 per cent garments (RMG) of all textiles, and drugs and from 7.2 per cent in 2023-24. On the other hand, the pharmaceuticals contributed positively (Chart III.10). weighted average maturity of borrowings increased to 20.7 years from 18.1 years in the previous year. States The growth in merchandise imports during raised market borrowing of ₹10.73 lakh crore in 2024- H2:2024-25 (October-February) was primarily 25, lower than the total sanctioned amount of ₹11.72 driven by imports of electronic goods, gold, lakh crore for the fiscal year (Table III.9). The Ways machinery (both electrical and non-electrical), and Means Advances (WMA) limits of the central vegetable oil, and chemical materials and products government, to meet temporary mismatches between receipts and payments, remained unchanged from the Chart III.9: Merchandise Trade previous year at ₹1.5 lakh crore for H1 and ₹50,000 crore for H2 in 2024-25. The WMA limits for states and union territories were increased to ₹60,118 crore from the earlier ₹47,010 crore, effective on July 1, 2024.9 The centre's gross market borrowings and net borrowings for 2025-26 (BE) are placed at ₹14.82 lakh crore and ₹11.54 lakh crore, respectively. III.1.4 External Demand During April-February 2024-25, merchandise exports saw a modest growth of 0.1 per cent, while merchandise imports recorded a rise of 5.7 per cent. During H2:2024-25 (October-February), India’s merchandise exports contracted by 1.2 per cent, while imports rose by 2.4 per cent. As a result, the Source: DGCI&S. 9 Based on the recommendations, by the group constituted by the RBI and consisting of select State Finance Secretaries. RBI Bulletin April 2025 57 tnec rep ni htworg y-o-Y noillib $SU 30 30 20 20 10 10 0 0 -10 -10 -20 -20 -30 -30 -40 -40 Exports Imports Non-POL exports Non-POL non-gold imports Trade balance (RHS) 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beFAPRIL 2025 Monetary Policy Report (Chart III.11). On the other hand, imports of coal, Services exports grew by 13.1 per cent during 2024- coke, and briquettes, petroleum, crude and products, 25 (April-February), a notable increase from 5.5 per pearls, precious and semi-precious stones, silver, and cent recorded in the same period of last year, reflecting iron and steel contributed negatively to the overall robust global demand for Indian services. In H2:2024- import growth. Non-oil exports posted a robust y-o-y 25 (October-February), services exports surged by 15.4 increase of 8.7 per cent during H2, while non-oil per cent, compared to a modest 6.0 per cent growth non-gold imports rose by 4.7 per cent to reach US$ in the previous year (Chart III.12). The growth in 199.7 billion during this period. H2 was primarily driven by strong performances Chart III.11: Merchandise Imports a: Imports Growth - Relative Contribution b: Major Drivers of Imports in H2:2024-25 (October-February) - Relative Contribution POL imports Gold imports Non-POL non-gold imports Merchandise imports (per cent) Note: Figures in parentheses in chart b are y-o-y per cent change in imports of the commodity during the period. Sources: DGCI&S; and RBI staff estimates. 58 RBI Bulletin April 2025 stniop egatnecreP 50 40 30 20 10 0 -10 -20 Percentage points 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q beF-naJ Electronic goods (11.9) Gold (12.6) Machinery, electrical and non- electrical (12.6) Vegetable oil (38.1) Chemical material and products (37.1) Iron and steel (-13.3) Silver (-36.1) Pearls, precious and semi-precious stones (-32.3) Petroleum, crude and products (-6.0) 2022-23 2023-24 2024-25 Coal, coke and briquettes, etc. (-30.6) -2 0 24 5 poT 5 mottoB Chart III.10: Merchandise Exports Notes: Figures in parentheses in chart b are y-o-y per cent change in exports of the commodity during the period. *: World trade data is available up to January 2025. Sources: DGCI&S; CPB Netherlands; and RBI staff estimates. stniop egatnecreP tnec reP a: Exports Growth - Relative Contribution b: Major Drivers of Exports in H2:2024-25 (October-February) - Relative Contribution 30 6 25 5 20 4 15 3 10 2 5 1 0 0 -5 -10 -1 -15 -2 -20 -3 Percentage points 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q beF-naJ Electronic goods (46.5) Engineering goods (10.9) Rice (53.4) RMG of all Textiles (13.2) Drugs and pharmaceuticals (5.6) Oil meals (-32.4) Organic and inorganic chemicals (-3.1) Iron ore (-64.7) Gems and jewellery (-10.3) 2022-23 2023-24 2024-25 Petroleum products (-40.6) Non-POL exports POL exports -10 -8 -6 -4 -2 0 2 4 Merchandise exports (per cent) World trade* (RHS) 5 poT 5 mottoBMonetary Policy Report APRIL 2025 Chart III.12: Services Trade Table III.10: Net Foreign Direct and Portfolio Investment (US$ billion) 2023-24 2024-25 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Net FDI 4.7 -0.8 4.0 2.3 6.6 -2.3 -2.8 0.9# Net FPI* 16.1 5.3 11.7 11.6 0.9 19.8 -11.4 -6.8 Notes: #: Net FDI for Q4:2024-25 is up to January 2025; *: Net FPI data up to Q3:2024-25 are based on balance of payments (BoP) statistics of RBI, while data for Q4:2024-25 is sourced from daily data, published by NSDL. Sources: National Securities Depository Limited (NSDL); and RBI. growing by 15.3 per cent over last year, a notable rebound compared to a 2.6 per cent contraction during the corresponding period of last year. Major Exports Imports sources of FDI inflows included Singapore, Mauritius, Source: RBI. the USA, UAE, Netherlands and Japan, which together accounted for 80.0 per cent of total FDI. The majority in software, business, and transportation services. of FDI equity inflows were into manufacturing, Among the world’s leading service-exporting nations, financial services, electricity generation, distribution India maintained its position within the top five & transmission, communication services, retail countries in 2024-25 (up to December 2024). Services imports rebounded from contraction and recorded a & wholesale trade, and computer services, which 12.1 per cent growth during 2024-25 (April-February), together received 77.0 per cent of FDI equity inflows. with a significant increase of 14.6 per cent during H2 Foreign portfolio investment (FPI) to India (October-February) on the back of buoyant domestic recorded a net outflow of US$ 18.3 billion in H2:2024- demand. 25, as portfolio investors turned net sellers in On a balance of payments (BoP) basis, India’s equities mainly due to hightened global uncertainties. current account deficit (CAD) widened marginally to Although FPI flows in the debt segment moderated in US$ 11.5 billion (1.1 per cent of GDP) in Q3:2024-25 H2:2024-25, they remained positive for the full year, from US$ 10.4 billion (1.1 per cent of GDP) in Q3:2023- reflecting the inclusion of Indian government bonds 24, but moderated from US$ 16.7 billion (1.8 per cent in J.P. Morgan’s benchmark emerging market index of GDP) in Q2:2024-25. and other indices. Overall, FPI recorded a net inflow of US$ 2.4 billion in 2024-25, a sharp decline from the In the financial accounts, net foreign direct investment (FDI) flows to India declined to US$ 2.5 net inflow of US$ 44.6 billion in the same period of the billion during April-January 2024-25 from US$ 11.5 previous year. The uncertain global economic outlook, billion in the same period of last year, mainly due to rising US bond yields, and moderation in corporate a surge in repatriations and increased outward FDI earnings seem to have dampened FPI sentiment. The (Table III.10). Gross FDI flows, however, remained FPI flows have revived in March 2025 and recorded strong at US$ 69.4 billion in 2024-25 (up to January), net inflow of US$ 3.8 billion. RBI Bulletin April 2025 59 tnec rep ni htworg y-o-Y 50 40 30 20 11.8 10 3.8 0 -10 -20 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q beF-naJ :4Q 2021-22 2022-23 2023-24 2024-25APRIL 2025 Monetary Policy Report External commercial borrowing (ECB) flows saw Chart III.13: GVA Growth and Momentum significant increase, reaching US$ 15.2 billion during 25 April-February 2024-25, as against US$ 2.8 billion 20 a year ago. Net accretions to non-resident deposits 15 surged to US$ 14.3 billion during April-January 10 7.4 2024-25 from US$ 10.2 billion in the previous year, 5 6.8 on the back of strong deposit growth in all three 0 accounts i.e., FCNR(B), NRE and NRO. As of March -5 28, 2025, India’s foreign exchange reserves stood -10 at US$ 665.4 billion, equivalent to 11.0 months of -15 annualized merchandise imports on a BoP basis and Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4# 92.7 per cent of the outstanding external debt as of 2022-23 2023-24 2024-25 December 2024. y-o-y q-o-q SAAR III.2 Aggregate Supply Notes: #: Implicit; and SAAR - Seasonally adjusted annualised rate. Sources: NSO; and RBI staff estimates. Aggregate supply – measured by real gross value III.2.1 Agriculture added (GVA) at basic prices – expanded by 6.2 per cent Real GVA in agriculture and allied activities in Q3:2024-25 (8.0 per cent in Q3:2023-24), showing recorded a six-quarter high growth of 5.6 per cent in improved momentum over the previous quarter (5.8 Q3:2024-25 (1.5 per cent a year ago) on the back of per cent growth in Q2:2024-25). This improvement in healthy kharif production. Q3 was supported by robust growth in agriculture and As on March 27, 2025, the water storage levels in allied sector activity and resilience in services activity major reservoirs across India stood at 42 per cent of full (Table III.11 and Chart III.13). Table III.11: Real GVA Growth (Y-o-y, per cent) Sector 2023-24 2024-25 Weighted 2023-24 2024-25 Contribution (FRE) (SAE) 2023-24 2024-25 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4# Agriculture, forestry and fishing 2.7 4.6 0.4 0.7 5.7 3.7 1.5 0.9 1.7 4.1 5.6 6.2 Industry 11.0 4.3 2.4 0.9 6.6 15.3 12.6 9.9 7.7 2.0 3.5 4.3 Mining and quarrying 3.2 2.8 0.1 0.1 4.1 4.1 4.7 0.8 6.8 -0.3 1.4 2.4 Manufacturing 12.3 4.3 2.1 0.8 7.3 17.0 14.0 11.3 7.5 2.1 3.5 4.3 Electricity, gas, water supply and other utilities 8.6 6.0 0.2 0.1 4.1 11.7 10.1 8.8 10.2 3.0 5.1 6.0 Services 9.2 7.5 5.8 4.7 12.1 8.3 8.5 8.0 7.2 7.4 7.3 8.0 Construction 10.4 8.6 0.9 0.8 9.2 14.6 10.0 8.7 10.1 8.7 7.0 8.9 Trade, hotels, transport, communication 7.5 6.4 1.4 1.2 11.0 5.4 8.0 6.2 5.4 6.1 6.7 7.0 Financial, real estate and professional services 10.3 7.2 2.4 1.7 15.0 8.3 8.4 9.0 6.6 7.2 7.2 8.0 Public administration, defence and other services 8.8 8.8 1.1 1.1 9.3 8.9 8.4 8.7 9.0 8.8 8.8 8.7 GVA at basic prices 8.6 6.4 8.6 6.4 9.9 9.2 8.0 7.3 6.5 5.8 6.2 6.8 Notes: FRE: First revised estimates; SAE: Second advance estimates; #: Implicit. Sources: NSO; and RBI staff estimates. 60 RBI Bulletin April 2025 tnec rePMonetary Policy Report APRIL 2025 Table III.12: Agricultural Production in 2024-25 (Lakh tonnes) Crop 2023-24 2024-25 Variation in 2024-25 Final (Per cent) Estimates Target SAE Over 2023-24 1. Foodgrains 3157.7 3259.2 3309.2 4.8 Kharif 1557.7 1613.7 1663.9 6.8 Rabi 1600.1 1645.5 1645.3 2.8 a. Rice 1278.6 1260.5 1364.4 6.7 b. Wheat 1132.9 1150.0 1154.3 1.9 c. Pulses 221.7 276.5 230.2 3.8 2. Oilseeds 384.4 434.0 416.7 8.4 3. Sugarcane 4531.6 4700.0 4350.8 -4.0 4. Cotton # 325.2 350.0 294.3 -9.5 5. Jute & Mesta ## 96.9 105.0 86.2 -11.0 Notes: Table covers data only for Kharif and Rabi seasons. #: Lakh bales of 170 kgs each; ##: Lakh bales of 180 kgs each. SAE: Second Advance Estimates. Source: Ministry of Agriculture and Farmers’ Welfare (MoA&FW), GoI. capacity, marking an increase of 16.5 per cent compared Allied activities like livestock, forestry and fishing to the previous year and 14.6 per cent above the contributed almost 82.0 per cent of agricultural GVA decadal average. Notably, storage levels exceeded the growth in 2023-24 (Chart III.14). Real GVA of agriculture decadal average in all regions, except the Northern and and allied activities expanded by 2.7 per cent in 2023- Eastern regions. 24 (FRE), primarily driven by 5.4 per cent growth in The second advance estimate (SAE) for 2024-25 livestock and 5.9 per cent growth in fisheries and placed foodgrains production at 3309.2 lakh tonnes, marking an increase of 4.8 per cent over the previous Chart III.14: Contribution of Crops year (Table III.12). Among major crops, rice production and Allied Activities increased by 6.7 per cent with a significant increase in both kharif and rabi output, while wheat production rose by 1.9 per cent. Pulses production is estimated to record a growth of 3.8 per cent. Among commercial crops, oilseeds production increased by 8.4 per cent, while the output of cotton and sugarcane registered a decline vis-à-vis last year. The production of horticultural crops in 2024-25 reached 3620.9 lakh tonnes as per the first advance estimates (FAE), 2.1 per cent higher than the final estimates for 2023-24. The growth in production was Crops Allied activities primarily attributed to a higher output of onions and Source: NSO; and RBI staff estimates. potatoes. RBI Bulletin April 2025 61 stniop egatnecreP 8 6 4 2 0 -2 -4 GVA agriculture and allied (y-o-y, per cent) 31-2102 41-3102 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 42-3202APRIL 2025 Monetary Policy Report Chart III.15: Stock and Procurement – Rice and Wheat aquaculture sector. In 2023-24, total meat production High-frequency indicators such as tractor and grew by 4.9 per cent, while milk production grew by fertiliser sales, and agriculture exports suggested 3.8 per cent. buoyancy in the rural economy during H2:2024-25, whereas demand for employment under Mahatma As on March 31, 2025, rice procurement for the Gandhi National Rural Employment Guarantee Act 2024-25 kharif marketing season reached 511.5 lakh (MNREGA) and agricultural credit growth reflected tonnes, an increase of 6.9 per cent over the previous moderation (Table III.13). Higher kharif and rabi year. Rice stocks at 659.3 lakh tonnes as of March 16, production coupled with improved reservoir levels 2025, 8.7 times the buffer requirement, while wheat are supportive of rural economic activity. FAE for stocks at 121.7 lakh tonnes were marginally lower horticultural production also indicate a positive trend than the buffer norms (Chart III.15). as compared to the previous year. Table III.13: Rural Economy - High Frequency Indicators Item Unit H1 (Apr-Sep) H2 (Oct-Mar) 2022-23 2023-24 2024-25 2022-23 2023-24 2024-25 Tractor sales* Number (in lakh) 4.9 4.7 4.7 3.8 3.3 3.9 Two-wheeler sales* Number (in lakh) 84.0 87.4 101.6 61.7 77.5 77.9 Fertiliser sales# Lakh tonnes 335.4 338.5 335.5 248.8 243.8 253.6 Demand for employment (MGNREGA) Crore households 13.9 15.1 12.6 12.0 11.5 12.0 Agriculture and allied sector exports# USD billion 26.4 23.3 23.4 16.4 15.4 18.2 Agriculture credit growth* y-o-y 13.4 16.7 16.4 14.9 20.0 11.4 Rice stock to buffer norm** Ratio 2.8 3.1 3.8 5.8 7.6 8.7 Wheat stock to buffer norm** Ratio 1.1 1.2 1.2 0.7 0.6 0.9 Notes: *: up to February; #: up to January; **: as on March 16, 2025. Sources: TMA; SIAM; MoC&F; Ministry of Rural Development (MoRD); CMIE; RBI; and Food Corporation of India (FCI). 62 RBI Bulletin April 2025 sennot hkaL a: Rice sennot hkaL b: Wheat 700 600 500 400 300 200 100 0 Stock Procurement Buffer norm Stock Procurement Buffer norm Note: Stock data pertains to March 16, 2025. Sources: Food Corporation of India (FCI); and Central Food Grains Procurement Portal (CFPP). 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 350 300 250 200 150 100 50 0 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raMMonetary Policy Report APRIL 2025 III.2.2 Industry an expansion of 4.4 per cent in Q3 (5.4 per cent during the previous year) and 5.5 per cent in January. While As per the SAE, industrial sector growth the production of basic metals, electrical equipment, moderated to 4.3 per cent in 2024-25, from 11.0 per coke and refined petroleum products, fabricated metal cent in the previous year, mainly owing to the sharp products, and machinery and equipment posted an deceleration in manufacturing along with a slowdown upsurge in Q3, manufacturing of food products, in mining activity. The industrial sector, however, pharmaceuticals, printing, and leather products picked up modestly and expanded by 3.5 per cent in acted as a drag on growth. In terms of the use- Q3:2024-25 as against 2.0 per cent in Q2, supported by based classification, primary, capital, intermediate, a recovery in manufacturing activity. Manufacturing infrastructure and consumer durables rose during Q3 sector witnessed a gradual recovery in sales growth and January. Consumer non-durable goods, however, and operating profit. Mining and quarrying activity contracted during this period. witnessed a slowdown in coal production and a Electricity, gas, water supply and other utility contraction in crude oil and natural gas production services registered 5.5 per cent growth in H2. in Q3. GVA of electricity, gas, water supply, and other Electricity generation rose modestly by 4.0 per cent utility services grew modestly by 5.1 per cent during in Q3:2024-25 (9.2 per cent a year ago) with thermal Q3 in the face of a relatively warmer winter along power generation remaining muted amidst subdued with a slowdown in industrial activity (Chart III.16). demand due to less harsh winter. Renewable energy, The index of industrial production (IIP) grew by 4.1 which has a share of 12.7 per cent in total generation, per cent during Q3:2024-25 and 5.0 per cent in January increased sharply by 17.2 per cent in Q3. In Q4 (up to (Chart III.17 and Table III.14). Mining and quarrying February), electricity generation grew by 3.0 per cent. registered a moderate growth of 1.8 per cent in Q3 Region-wise, electricity demand exhibited divergence and 4.4 per cent in January. Manufacturing recorded –– while the northern region maintained robust Chart III.16 Industrial GVA Growth Note: Data for Q3:2024-25 are based on results of 1,675 listed private Note: #:Implicit. manufacturing companies. Sources: NSO: and RBI staff estimates. Source: RBI staff estimates based on data published by listed companies. RBI Bulletin April 2025 63 stniop egatnecreP a: Weighted Contribution to Industrial GVA Growth tnec rep ni htworg y-o-Y b: Manufacturing Sector's Profitability 60 15 45 10 30 5 15 0 0 -5 -15 -10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4# Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2022-23 2023-24 2024-25 2022-23 2023-24 2024-25 Cost of raw materials Staff cost Mining and quarrying Interest expenses Depreciation Manufacturing Profit before tax Electricity, gas, water supply and other utility services Industry (y-o-y)APRIL 2025 Monetary Policy Report Chart III.17: Index of Industrial Production (IIP) demand, other regions recorded subdued demand per cent, with the western region leading the growth, with the southern region witnessing a contraction in followed by the eastern, southern and northern Q3. In Q4, electricity demand growth increased to 3.5 regions (Table III.15). Table III.14: Industrial Sector y-o-y growth (Per cent) Indicators 2024-25 Q1 Q2 Q3 Jan Feb Mar 1 PMI: Manufacturing (>50 indicates growth over 58.2 57.4 56.8 57.7 56.3 58.1 previous month) 2 Index of Industrial Production (IIP) 5.5 2.7 4.1 5.0 3 IIP: Manufacturing 4.3 3.3 4.4 5.5 4 IIP: Primary goods 1.1 1.6 3.0 5.5 5 IIP: Capital goods 3.0 4.9 7.3 7.8 6 IIP: Infrastructure and construction goods 8.1 3.9 6.7 7.0 7 IIP: Consumer durables 10.7 6.6 9.1 7.2 8 IIP: Consumer non-durables -0.2 -2.2 -1.8 -0.2 9 Eight Core Industries (ECI) 6.3 2.4 4.8 5.1 2.9 10 ECI: Steel 8.4 4.3 7.8 4.7 5.6 11 ECI: Cement 0.4 3.2 6.6 14.6 10.5 12 Electricity demand 10.2 -0.7 2.6 1.3 2.4 6.6 Production of Automobiles 13 Passenger vehicles 5.8 -0.7 -8.9 3.7 4.5 14 Two-wheelers 19.6 12.5 8.0 10.3 1.6 15 Three wheelers 9.4 6.3 -2.1 16.2 6.5 16 Tractors 1.0 3.2 12.1 23.7 -7.8 Sources: CMIE; CEIC; NSO; SIAM and RBI staff estimates. 64 RBI Bulletin April 2025 stniop egatnecreP a: Sectoral Contribution to IIP Growth (y-o-y) stniop egatnecreP b: Use-based Contribution to IIP Growth (y-o-y) 12 10 8 6 4 2 0 -2 Primary goods Capital goods Intermediate goods Infrastructure/construction goods Mining Manufacturing Consumer durables Consumer non-durables Electricity General (per cent, y-o-y) General (per cent, y-o-y) Sources: NSO; and RBI staff estimates. 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 12 10 8 6 4 2 0 -2 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJMonetary Policy Report APRIL 2025 Table III.15: Electricity Generation and Consumption (Y-o-y, per cent) Indicators 2023-24 2024-25 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Jan Feb Mar Electricity generation Thermal 2.1 14.7 14.3 10.1 12.1 -1.3 0.0 -2.9 1.0 3.1 Nuclear -6.4 16.7 10.0 -2.2 28.3 18.4 11.4 15.1 18.6 16.8 Hydro -10.0 -13.4 -30.7 -20.2 1.0 6.2 28.3 16.3 17.6 24.2 Renewables 8.1 21.9 7.0 5.6 7.0 7.3 17.2 31.9 12.2 Electricity consumption Northern region -8.9 8.4 6.0 8.3 22.0 3.1 9.5 -2.9 2.4 6.0 Western region 3.5 20.8 7.7 7.1 5.5 -6.7 0.4 3.3 3.0 9.5 Southern region 10.7 16.3 18.2 9.3 3.3 0.8 -2.3 3.1 2.1 3.9 Eastern region 4.9 6.6 9.2 7.9 9.8 0.6 3.9 2.7 1.7 6.6 All-India 1.5 13.4 9.9 8.1 10.2 -0.7 2.6 1.3 2.4 6.6 Sources: Central Electricity Authority (CEA); and Power System Operation Corporation Limited (POSOCO). The manufacturing purchasing managers’ index to GVA growth in 2024-25. A notable transformation (PMI) stayed in expansion zone and stood at 56.8 in Q3, within India’s services sector has been observed with improving further to 57.4 in Q4 with an uptick in new the growing share of high-skill and high-value services. export orders and employment. Business expectations The services sector maintained its momentum in for manufacturing remained optimistic, as indicated Q3:2024-25, with an impetus from trade, hotels, by future output assessment (Chart III.18a). transport, communication and broadcasting; III.2.3 Services financial, real estate and professional services; and Services sector remains the mainstay of the Indian public administration, defence and other services economy, with contribution of around 75 per cent (Chart III.19a). As per the SAE, the services sector grew Chart III.18: PMI Manufacturing and Services a: PMI Manufacturing b: PMI Services 70 60 50 40 30 20 10 0 PMI manufacturing New orders New export orders No change Future output Note: PMI>50: Expansion, PMI< 50: Contraction. Source: HSBC, S&P Global. RBI Bulletin April 2025 65 xednI 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM Business activity New business New export business No change Business expectations xednI 70 60 50 40 30 20 10 0 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raMAPRIL 2025 Monetary Policy Report robustly at 7.5 per cent in 2024-25, on top of 9.2 per per cent and 10.5 per cent, respectively, in March cent growth a year ago. Finished steel consumption 2025. Insurance premia in non-life segments grew and cement production – proximate indicators of at a healthy rate in H2 (October-February), while construction activity – improved from Q3 and recorded life insurance premia witnessed a contraction (Table III.16). double-digit growth during Jan-Feb 2025. Steel consumption, however, contracted marginally in March Nominal sales of non-IT services remained (Chart III.19b). buoyant and registered double-digit growth in Q3. The performance of IT sector also inched up further in Q3, Trade, hotels, transport, and communication despite global headwinds (Chart III.20). recorded a growth of 6.7 per cent in Q3:2024-25 (6.1 per cent in Q2). GST collections improved in Q4, Chart III.20: Nominal Sales Growth indicating healthy domestic trading activity. Domestic 70 air passenger traffic sustained strong growth in 60 January-February 2025, reflecting steady growth in 50 tourism and business-related travels. Indicators of 40 transportation services exhibited a mixed picture – toll collections remained strong in Q4 and port cargo 30 rebounded strongly in Q4 after a weak performance 20 in Q3, while passenger vehicle sales recorded muted 10 growth during this period. 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Financial, real estate and professional services 2022-23 2023-24 2024-25 rose by 7.2 per cent in Q3:2024-25 and was a major contributor to services sector GVA growth (33.1 per Note: Results are based on 2,924 listed non-government non-financial companies cent) as well as to aggregate GVA growth (23.9 per for Q3:2024-25. Source: RBI staff estimates. cent). Bank credit and deposits expanded by 12.1 66 RBI Bulletin April 2025 tnec rep ni htworg y-o-Y Chart III.19: Services Sector a: Service Sector Components b: Construction Indicators 30 25 20 15 10 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4# 2022-23 2023-24 2024-25 Construction Trade, hotels, transport, communication and services related to broadcasting Financial, real estate & professional services Public administration, defence and other services Note: #: Implicit. Sources: NSO; Office of Economic Adviser; and Joint Plant Committee. Manufacturing Services (non-IT) Services (IT) sennot noilliM xednI Finished steel consumption Cement production (RHS) tnec rep ni htworg y-o-Y 14 220 13 200 12 11 180 10 160 9 8 140 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raMMonetary Policy Report APRIL 2025 Table III.16: Services Sector y-o-y growth (Per cent) Indicators 2024-25 Q1 Q2 Q3 Jan Feb Mar 1 PMI: Services (>50 indicates growth over previous month) 60.5 59.6 58.7 56.5 59.0 58.5 Construction 2 Steel consumption 15.0 12.0 7.8 10.9 10.9 -0.5 3 Cement production 0.4 3.2 6.6 14.6 10.5 Trade, Hotels, Transport, Communication and Services related to Broadcasting 4 Commercial vehicle sales 3.5 -11.0 1.2 5 Domestic air passenger traffic 5.6 7.2 11.4 14.1 12.1 6 Domestic air cargo 7.1 7.6 4.6 6.9 -2.5 7 International air cargo 18.4 21.9 15.0 7.1 -6.3 8 Port cargo 3.9 6.2 -1.7 6.2 7.4 13.3 9 Toll collection: volume 5.6 7.6 9.9 14.8 18.7 11.9 10 Petroleum consumption 3.9 1.0 5.4 3.0 -5.2 -3.1 11 GST E-way bill 16.0 16.8 16.9 23.1 14.7 20.2 12 GST revenue 10.2 8.9 8.3 12.3 9.1 9.9 Financial, Real Estate and Professional Services 13 Credit outstanding 13.9 14.4 12.4 12.5 12.0 12.1 14 Bank deposits 10.6 12.0 10.2 10.6 10.6 10.5 15 Life insurance premium 22.9 16.5 -6.6 -8.1 -11.6 16 Non-life insurance premium 13.3 1.9 10.8 6.6 -2.8 Sources: CEIC; HSBC; IRDAI; MoSPI; NSO; S&P Global; SIAM; and RBI Staff Estimates. Real estate activity in Q3:2024-25 presented surpassed launches, unsold inventory registered a mixed signals with lesser new launches, reflecting marginal decline (Chart III.21a). The growth in all- uncertainty about future demand, even as sales India housing prices moderated in Q3, with its pace recorded some uptick in momentum. As sales decelerating across all major cities (Chart III.21b). Chart III.21: Housing Sector – Launches, Sales and Prices a: Housing Activity b: Housing Price Index 160 1,000 140 800 120 100 600 80 60 400 40 200 20 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2021-22 2022-23 2023-24 2024-25 Sources: PropTiger and RBI. RBI Bulletin April 2025 67 )sdnasuoht ni( sinu fo rebmuN 20 15 10 5 0 -5 -10 -15 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2021-22 2022-23 2023-24 2024-25 Units launched Units sold Unsold inventory (RHS) tnec rep ni htworg y-o-Y Mumbai Delhi Bengaluru Chennai All India )sdnasuoht ni( stinu fo rebmuNAPRIL 2025 Monetary Policy Report Public administration, defence, and other services III.3 Conclusion (PADO) grew at 8.8 per cent in Q3, primarily driven by After witnessing a transient slowdown in other services, like, health, education and recreation. Q2:2024-25, economic activity recovered in Q3 The centre’s revenue expenditure, excluding interest on the back of healthy private consumption and payments and subsidies, increased by 11.2 per cent improved government’s capital expenditure. Further, during Q3 before contracting by 3.0 per cent in Jan-Feb buoyancy in the rural economy, resilient services 2025. sector, governments’ efforts to spur household Services PMI remained in expansionary zone demand through tax incentives and healthy balance at 58.7 in Q3 and 58.0 in Q4, although it moderated sheets of financial entities and corporates along with from 60.1 in H1:2024-25, supported by employment the easing of financing conditions are expected to and new business activity from abroad (Chart III.18b give an impetus to growth. Continued geopolitical and Table III.16). The composite PMI index moderated uncertainties, global trade disruptions, weather- from the high of 60.4 in H1:2024-25 to 58.9 in Q3, related disturbances amidst high volatility in the and further to 58.6 in Q4, but remained comfortably global financial markets, on the other hand, pose above the 50-mark signalling sustained growth. PMI downside risks to the outlook. While reciprocal tariff manufacturing and PMI services readings for India by the US will adversely impact India’s net external have remained the highest globally since July 2022 demand, India’s relative tariff advantage over its peer and April 2023, respectively. economies may contain the impact. 68 RBI Bulletin April 2025Monetary Policy Report APRIL 2025 IV. Liquidity Conditions and During H2:2024-25, the monetary policy committee (MPC) changed the stance from withdrawal Financial Markets of accommodation to neutral in October 2024 to ensure that inflation progressively aligns to the 4 per Domestic financial markets remained relatively cent target, while supporting growth. To ease liquidity stable and resilient in contrast to volatile global markets conditions, the cash reserve ratio (CRR) of banks during H2:2024-25. Money market rates evolved in sync was reduced by 50 basis points to 4.0 per cent of net with the policy stance and shifts in liquidity conditions demand and time liabilities (NDTL) in December 2024, while bond yields eased in response to domestic developments restoring the CRR to its pre-pandemic level while and global cues. Transmission to lending and deposit rates releasing primary liquidity to the tune of ₹1.16 lakh remained robust. Bank credit growth moderated in crore to the banking system. To assure markets and H2:2024-25. The Reserve Bank took a slew of liquidity instil confidence about the availability of adequate augmenting measures to ensure orderly market conditions. liquidity to meet the productive requirements of Introduction the economy, the Reserve Bank undertook a slew During H2:2024-25, global financial markets of liquidity augmenting measures in Q4:2024-25. It remained volatile amidst elevated trade and policy introduced daily variable rate repo (VRR) auctions on uncertainties and continuing geopolitical tensions. all working days with reversal taking place on the next Advanced economy central banks have been charting working day effective January 16, 2025. In addition, out a carefully calibrated course for monetary the Reserve Bank injected durable liquidity through policy in the wake of a spurt in volatility and term repo auctions, open market purchase operations foggy macroeconomic outlook. Global bond yields, and USD/INR Buy/Sell swaps. The Reserve Bank especially at the longer end, gyrated in line with the increased the aggregate limit available to Standalone shifting economic outlook and expectations about Primary Dealers (SPDs) under the Standing Liquidity increasingly divergent monetary policy trajectories Facility (SLF) from ₹10,000 crore to ₹15,000 crore, across jurisdictions. Amidst heightened volatility and starting from April 2, 2025, and announced a monthly regional variations, global equity markets fell sharply calendar of open market purchase operations for April in Q4:2024-25. Volatile capital flows and exchange 2025. Furthermore, the MPC reduced the policy repo rates and their attendant impact on domestic rate by 25 basis points to 6.25 per cent in February financial conditions posed complex policy challenges 2025. in emerging market economies (EMEs) (see Chapter V Drivers and Management of Liquidity for details). IV.1 Liquidity Conditions and the Operating System liquidity, as measured by net balances Procedure of Monetary Policy under the liquidity adjustment facility (LAF), transited from surplus in H1:2024-25 to deficit in H2:2024-25 The Reserve Bank of India (RBI) Act, 1934 requires (Chart IV.1). the RBI to place the operating procedure related to the implementation of monetary policy and changes On a net basis, average daily injection under the thereto from time to time, if any, in the public LAF amounted to ₹0.36 lakh crore in H2 as against domain.1 average daily net absorption of ₹0.39 lakh crore in 1 The revised liquidity management framework was announced on February 6, 2020 in the Statement on Developmental and Regulatory Policies and operationalised on February 14, 2020. The salient features of the framework are given in the Monetary Policy Report of April 2024. RBI Bulletin April 2025 69APRIL 2025 Monetary Policy Report Chart IV.1: Liquidity Conditions Source: Reserve Bank of India (RBI). H1. Changes in the Government of India (GoI) cash reduction in CRR and the Reserve Bank’s liquidity balances, expansion in currency in circulation (CiC) augmenting measures during H2 (Table IV.1). and volatile capital flows emerged as the major drivers Within H2, system liquidity was in surplus of liquidity during H2. The leakage of banking system during October-November (except for a brief period liquidity due to the increase in currency demand at end November) on account of higher government and the Reserve Bank’s forex market operations was spending, notwithstanding an increase in CiC due to partly offset by the drawdown of GoI cash balances, festival related demand in October and significant Table IV.1: Liquidity – Key Drivers and Management (₹crore) 2023-24 2024-25 H1 H2 H1 Q3 Q4* H2* Drivers (i) CiC [withdrawal (-) /return (+)] 89,356 -2,26,366 33,556 -78,963 -1,59,204 -2,38,167 (ii) Net Forex Purchases (+)/ Sales (-) 1,44,667 1,94,861 70,402 -3,27,601 -2,52,034^ -5,79,635^ (iii) GoI Cash Balances [build-up (-) / drawdown (+)] -4,17,850 1,42,694 -1,50,494 1,06,873 78,358 1,85,231 (iv) Excess Reserves [build-up (-) / drawdown (+)] 34,925 -46,886 36,768 41,534 -39,962 1,572 Management (i) Net OMO Purchases (+)/ Sales (-) -8,480 -10,025 -24,040 0 2,83,386 2,83,386 (ii) Required Reserves [including both change in NDTL and CRR] -1,35,220 7,503 -55,613 39,349 37,101 76,450 (iii) Long term Forex Swaps Buy/Sell (+)/Sell/Buy (-) - - - - 2,18,000^ 2,18,000^ (iv) Term Repo Auctions - - - - 1,82,964 1,82,964 Memo Item Net Absorption (+)/ Injection (-) as at end-period -97,015 -52,918 84,651 -1,82,788 -172 -172 Notes: 1. (+) / (-) sign suggests accretion/depletion in banking system liquidity. 2. Data pertain to the last Friday of the respective period. 3. Net forex purchases or sales do not include the first leg of long-term forex swaps announced by the Reserve Bank. *: Data for Q4 and H2:2024-25 are up to March 28, 2025. ^: approximate values. Source: RBI. 70 RBI Bulletin April 2025 erorc hkal ₹ 4.5 3.5 2.5 1.5 0.5 -0.5 -1.5 -2.5 -3.5 -4.5 Daily SDF Variable rate reverse repo Total absorption MSF Variable rate repo Net LAF [Surplus (+) / Deficit (-)] 42-rpA-10 42-rpA-51 42-rpA-92 42-yaM-31 42-yaM-72 42-nuJ-01 42-nuJ-42 42-luJ-80 42-luJ-22 42-guA-50 42-guA-91 42-peS-20 42-peS-61 42-peS-03 42-tcO-41 42-tcO-82 42-voN-11 42-voN-52 42-ceD-90 42-ceD-32 52-naJ-60 52-naJ-02 52-beF-30 52-beF-71 52-raM-30 52-raM-71 52-raM-13Monetary Policy Report APRIL 2025 capital outflows in November. System liquidity turned Chart IV.2: Banks' Liquidity Demand and SDF Holding into deficit during the second half of December due to the combined impact of advance tax payments, capital outflows and currency leakage. The liquidity infusing impact of CRR reduction, drawdown of GoI cash balances and excess reserves was overwhelmed by the withdrawal of banking system liquidity due to increase in CiC and the Reserve Bank’s forex market operations. As a result, average daily net absorption under the LAF (including MSF) declined to ₹0.8 lakh crore in Q3:2024-25 compared to ₹1.3 lakh crore in the preceding quarter. In contrast, liquidity conditions remained in deficit for a major part of Q4 due to continued capital outflows and seasonal increase in CiC. Reflecting liquidity tightness, the average net injection under the LAF stood at ₹1.6 lakh crore in Source: RBI. Q4. To manage liquidity conditions, the Reserve Bank introduced daily VRR auctions on all working The Reserve Bank remained nimble and flexible days beginning January 16, 2025, with the notified in its liquidity management and conducted two-way amount being in sync with the evolving liquidity operations under the LAF in view of the changing conditions. Furthermore, the Reserve Bank took a liquidity dynamics. With system liquidity remaining slew of measures – Open Market Operations (OMOs) in surplus during Q3, five main and 23 fine tuning purchases, USD/INR Buy/Sell swaps and long term VRRR auctions (1-4 days maturity) were conducted, VRRs – to inject durable liquidity into the system. cumulatively mopping up about ₹11.7 lakh crore Consequently, system liquidity turned into surplus at from the banking system in October-November 2024.2 end-March, after a gap of more than 3 months. Banks showed reluctance in parking liquidity with Banks’ recourse to the marginal standing facility the Reserve Bank, as reflected in the lower bid-offer (MSF) at a daily average of ₹0.06 lakh crore in H2 was ratio for main as well as fine-tuning VRRR operations lower than ₹0.08 lakh crore in H1. Of the average total (Chart IV.3.a). The demand for liquidity remained absorption under the LAF at ₹1.26 lakh crore during elevated during mid-December to February, as reflected H2, average placement under the standing deposit in the higher bid-cover ratio for the repo auctions. As facility (SDF) constituted about 82.6 per cent (₹1.04 liquidity turned into deficit since the latter half of lakh crore), while the remaining amount was absorbed December, two main and 12 fine-tuning VRR auctions through variable rate reverse repo (VRRR) auctions. were conducted, cumulatively injecting ₹9.4 lakh crore The simultaneous occurrence of liquidity deficit into the system. The demand for liquidity, as reflected conditions alongside substantial fund placements in the bid-cover ratios of daily VRRs, moderated in under the SDF suggests asymmetric distribution March as liquidity conditions eased in the wake of of liquidity within the banking system as well as several liquidity augmenting measures (Chart IV.3.b). increased liquidity preference on the part of banks Overall, the Reserve Bank conducted four main and (Chart IV.2). 62 fine-tuning VRR auctions to alleviate the liquidity 2 Four fine-tuning VRR auctions were conducted during November 22-28 to alleviate liquidity tightness due to GST related payments. RBI Bulletin April 2025 71 erorc hkal ₹ 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 42-rpA-1 42-rpA-92 42-yaM-72 42-nuJ-42 42-luJ-22 42-guA-91 42-peS-61 42-tcO-41 42-voN-11 42-ceD-9 52-naJ-6 52-beF-3 52-raM-3 52-raM-13 Total Injection through Repos and MSF SDF holdingAPRIL 2025 Monetary Policy Report Chart IV.3: Bid-Offer/Cover Ratio and Banks’ Preference for Liquidity a: Bid-Offer/Cover Ratio of Variable Rate b: Liquidity Defi cit and Bid-cover Ratio Operations of Daily VRRs Note: Figures in parentheses indicate number of operations. Source: RBI. tightness during Q4:2024-25, cumulatively injecting liquidity through a combination of CRR cut, open ₹48.7 lakh crore into the banking system. market purchases, term VRR auctions and USD/ To meet durable liquidity requirements, the INR Buy/Sell swaps during H2:2024-25 (Table IV.2). Reserve Bank injected around ₹8.0 lakh crore of The high bid-cover ratios for the OMOs and forex Table IV.2: Durable Liquidity Measures during H2:2024-25 (Amount in ₹ crore) Measures Auction Date Description Bid Cover Ratio Liquidity injected CRR Cut Announced on CRR cut by 50 bps in two equal tranches of 25 1,16,000* December 6, 2024 bps each with effect from the fortnight beginning December 14 and December 28 OMO Purchase Q4:2024-25 Through NDS-OM 38,825 OMO Purchase January 30, 2025 Notified Amount: 20,000 6.03 20,020 auctions February 13, 2025 Notified Amount: 40,000 4.53 40,000 February 20, 2025 Notified Amount: 40,000 4.69 40,000 March 12, 2025 Notified Amount: 50,000 2.51 50,000 March 18, 2025 Notified Amount: 50,000 2.02 50,000 March 25, 2025 Notified Amount: 50,000 1.35 44,541 Term Repo Auctions February 07, 2025 56-day VRR auction 2.17 50,010 Notified Amount: 50,000 February 14, 2025 49-day VRR auction 1.33 75,003 Notified Amount: 75,000 February 21, 2025 45-day VRR auction 0.77 57,951 Notified Amount: 75,000 USD/INR Buy/Sell January 31, 2025 Tenor: 6 months 5.12 44,000* swap auctions (Settlement on Feb 4, 2025) Notified Amount: USD 5 billion (USD 5.10 Billion) February 28, 2025 Tenor: 3 years 1.62 88,000* (Settlement on Mar 4, 2025) Notified Amount: USD 10 billion (USD 10.06 Billion) March 24, 2025 Tenor: 3 years 2.23 86,000* (Settlement on Mar 26, 2025) Notified Amount: USD 10 billion (USD 10.04 Billion) Total 8,00,350* Note: * indicates approximate value. Source: RBI. 72 RBI Bulletin April 2025 oitaR oitaR )LTDN fo tnec rep sa( noitcejni teN 2.5 2.0 1.6 1.95 1.89 1.4 2.0 (1) (4) 1.5 1.2 1 1.5 1.10 1.08 1.03 1.0 0.8 0.96(12) (2) (18) 0.90 1.0 (2) (20) 0.6 0 (1.4 17 ) 0 (1.5 29 ) 0 (. 15 )5 0 (2.5 48 ) 0.5 0.4 0.5 0.20 0.17 0.2 (3) 0.07 (1) (2) 0.0 0 0.0 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Main Repo Main Reverse Repo Fine-tuning Repo Fine-tuning Reverse Repo 52-naJ-61 52-naJ-02 52-naJ-22 52-naJ-32 52-naJ-72 52-naJ-92 52-naJ-13 52-beF-4 52-beF-6 52-beF-01 52-beF-21 52-beF-41 52-beF-81 52-beF-02 52-beF-42 52-beF-72 52-raM-30 52-raM-50 52-raM-70 52-raM-11 52-raM-31 52-raM-81 52-raM-91 52-raM-12 52-raM-52 52-raM-72 Bid-Cover ratio Liquidity Deficit (RHS)Monetary Policy Report APRIL 2025 swaps suggested high demand for durable liquidity. a year ago. The money multiplier increased to 5.7 as Considering this and the expected financial year-end on March 21, 2025, from 5.4 a year ago, reflecting the liquidity tightness, the Reserve Bank provided further dual impact of both the CRR cut and a lower currency- durable liquidity support through additional OMO deposit ratio. purchase auctions of ₹1,50,000 crore and a USD/INR IV.2 Domestic Financial Markets Buy/Sell swap auction of USD 10 billion for a tenor of In contrast to global developments, domestic thirty-six months during March. financial markets remained relatively stable and As on March 28, 2025, reserve money (RM) resilient. Money market rates evolved in sync with expanded by 3.3 per cent (y-o-y) as against 6.7 per the policy stance and shifts in liquidity conditions. cent a year ago. The lower growth in RM reflected Long-term government bond yields eased in response the decline in bankers’ deposits with the RBI on to domestic developments and global cues. Corporate account of the reduction in cash reserve ratio (CRR) in bond yields generally softened while spreads December 2024. Adjusted for the CRR change, growth widened during H2:2024-25 reflecting higher softening in RM stood at 5.8 per cent (6.7 per cent a year ago). of G-sec yields. The simultaneous occurrence of rising As on March 21, 2025, growth (y-o-y) in money supply uncertainties and liquidity constraints drove spreads (M3) decelerated to 9.6 per cent from 11.2 per cent across market segments (Box IV.1). Equity markets Box IV.1: What Drives Yields and Spreads – Liquidity or Uncertainty? In the recent period, global financial markets have and Yinjie, 2019). Accordingly, the impact of liquidity remained volatile amidst trade and policy uncertainties, conditions and uncertainty on spreads is examined based lingering geopolitical tensions and shifting expectations on monthly data of money and bond markets for the about the monetary policy trajectories of advanced period January 2012 to January 2025, using the following economy central banks. These global spillovers have a regression specification: disconcerting impact on domestic financial conditions in S β β β β Emerging Market and Developing Economies (EMDEs), t t t t β ρ S necessitating policy interventions. In the backdrop of = 0 + 1 t* Liq_Cond + 2 * Liq_tUncertt + 3t * Liq_Cond * elevated uncertainties, the attendant impact of such ,Lwiqh_eUrnec Ser dte +n o4t e* sE scpor_ePaodl_sU innc tehret +m o n* ey-1 a +n εd bond market t interventions on domestic liquidity conditions has a segments3; is liquidity conditions as proxied t bearing on yields and spreads across market segments, by Net LAF as a proportion of NDTL in which lower which merit closer scrutiny from a policy perspective. values indicL aiq te_ C ro en lad tively tighter liquidity conditions; is an indicator variable for months of high Related literature suggests that spreads in the money t and bond markets are driven by uncertainty, apart from liquidity uncertainty4; and Eco_Pol_Uncert captures Liq_Uncert prevailing liquidity conditions. Uncertainty could emanate global economic policy uncertainty5. In addition, an from volatility in liquidity conditions, which can have its interaction term of liquidity conditions and liquidity own independent impact on spreads by increasing the uncertainty is included in the specification to capture the demand for precautionary savings (Amisano and Tristani, heterogeneous impact of liquidity conditions on spreads 2019). Additionally, economic and policy uncertainty during periods of high uncertainty (Chart IV.1.1). Lagged may also cause spreads to increase by tightening credit dependent variable is included to capture the persistence supply and increasing borrowers’ default premia (Ashraf in spreads. (Cont.) 3 Weighted average call rate (WACR) and weighted average money market rate (WAMMR) spreads are computed over the policy repo rate, while CP and bond market spreads are computed over the risk-free rates of corresponding maturities. 4 Liquidity uncertainty is proxied by conditional volatility, which is estimated using a GARCH (1,1) model fitted on the daily data of liquidity conditions. Months having higher uncertainty (in the top decile of conditional volatility) are assigned a value of 1, and the rest are assigned 0. 5 The logarithmic form of the Purchasing Power Parity (PPP)-adjusted Global Economic Policy Uncertainty Index (Baker et al., 2016) is used in the regression. RBI Bulletin April 2025 73APRIL 2025 Monetary Policy Report 3 2.5 2 1.5 1 0.5 0 -3 -2 -1 0 1 2 3 4 5 6 -0.5 -1 -1.5 Source: RBI staff estimates. The estimates suggest that an easing of liquidity conditions money market spreads, implying the intensified impact lowers spreads across all segments in a statistically of liquidity conditions during periods of high uncertainty. significant manner, albeit more in the money than in bond From a policy perspective, the result suggests that markets (Table IV.1.1). Increase in liquidity uncertainty is providing sufficient liquidity has a more pronounced associated with higher spreads in the overnight money impact on spreads, especially during uncertain times. market but its effect on spreads in Commercial Paper (CP) Moreover, global economic policy uncertainty is found to and bond markets is found to be insignificant. This may be have a significant impact on spreads in CP and corporate attributed to the spreads in CP and bond market reflecting bond markets. Overall, the findings suggest that while pure credit risk premium, while the liquidity uncertainty liquidity and uncertainty drive spreads in financial premium gets captured in the risk-free rates. Notably, markets with their simultaneous occurrence having a the interaction term of liquidity condition and liquidity magnified impact, their relative importance varies across uncertainty turns out to be statistically significant for market segments and financial cycles. Table IV.1.1: Drivers of Spread in Money and Bond Market Dependent Variable Regressors WAMMR AA AAA AA AAA WACR spread CP spread spread 3-year spread 3-year spread 5-year spread 5-year spread Liquidity Condition -0.033*** -0.031** -0.046*** -0.024*** -0.026*** -0.021*** -0.020*** Liquidity Uncertainty 0.192*** 0.194*** 0.039 0.054 0.022 -0.006 -0.026 Liquidity Condition*Liquidity -0.056** -0.089*** 0.043 0.013 0.021 0.009 0.012 Uncertainty Global EPU 0.154** 0.103** 0.040 0.096*** 0.050** Constant -0.014 -0.029 -0.554 -0.230 -0.057 -0.289** -0.176 Lagged Dependent Variable 0.749*** 0.751*** 0.707*** 0.774*** 0.815*** 0.840*** 0.890*** Number of Observations 156 156 156 156 156 156 156 Adjusted R-squared 0.782 0.768 0.615 0.712 0.785 0.800 0.882 Note: ‘***’,‘**’ and ‘*’ represent statistical significance at 1 per cent, 5 per cent and 10 per cent level, respectively. References: Amisano, G., and Tristani, O. (2019). Uncertainty Shocks, Monetary Policy and Long-Term Interest Rates. ECB Working Paper No. 2279. Ashraf, B.N., and Yinjie, S. (2019). Economic policy uncertainty and banks’ loan pricing. Journal of Financial Stability, Volume 44. Baker, S.R., Bloom, N., Davis, S.J. (2016). Measuring economic policy uncertainty. Quarterly Journal of Economics, 131, 1593-1636. 74 RBI Bulletin April 2025 daerps RCAW Chart IV.1.1: WACR Spread and Liquidity Conditions Liquidity Uncertainty Bottom 75% Top 25% Liquidity ConditionMonetary Policy Report APRIL 2025 experienced a persistent decline in H2:2024-25 end; instead, they preferred parking funds under the amidst geopolitical, trade and policy uncertainties SDF. In early January, the WACR reverted closer to the and foreign portfolio investment (FPI) outflows. policy repo rate as liquidity conditions eased before The INR traded with a depreciating bias against the tightening again in the second week. The WACR US dollar until February, but recovered some of the moderated since mid-January with the introduction loses in March and remained among the least volatile of daily VRR, the policy repo rate cut in February and major EME currencies. In the credit market, despite the RBI’s liquidity augmenting measures. some moderation, growth in bank credit continued to Generally, movements in WACR mainly reflected outpace deposit expansion in H2:2024-25. transient liquidity conditions, softening during IV.2.1 Money Market the beginning of the month on higher government spending and hardening during the third week due to The weighted average call rate (WACR) – the operating target of monetary policy – moved in tandem tax outflows (Chart IV.4.a). Reflecting the alleviation with the policy repo rate and the evolving liquidity of liquidity tightness at the short-end, the average conditions. During H2:2024-25, the WACR, which spread of WACR over the policy repo rate declined remained within the policy corridor and hovered close to 7 basis points (bps) in March 2025 from a high of to the policy repo rate during October-November, 15 bps in December 2024 (Chart IV.4.b). Volatility of hardened, moving close to and occasionally breaching the WACR, as measured by the exponential weighted the ceiling of the LAF corridor (MSF rate) during the moving average (EWMA)6, however, continued to second half of December and early January. This was remain elevated till March 2025. The overnight rates in partly attributed to the lower lending volumes in the the collateralised segment, i.e., triparty repo (TREPS) call money market as banks were unwilling to on- and market repo broadly remained aligned with the lend in the uncollateralised market at the quarter- WACR. Chart IV.4: Policy Corridor and WACR a: Liquidity, Policy Corridor and WACR b: Average Spread of WACR over Repo Rate and Volatility Sources: RBI; and RBI staff calculations. 6 EWMA is an improvement over simple variance as it assigns greater weight to the more recent observations. EWMA expresses volatility as a weighted average of past volatility with higher weights assigned to the more recent observations. RBI Bulletin April 2025 75 tnec reP erorc hkal ₹ stniop sisaB )AMWE( ytilitaloV 7.50 3.5 3.0 7.25 2.5 7.00 2.0 1.5 6.75 1.0 0.5 6.50 0.0 6.25 -0.5 -1.0 6.00 -1.5 5.75 -2.0 -2.5 5.50 -3.0 42-rpA-10 42-rpA-02 42-yaM-90 42-yaM-82 42-nuJ-61 42-luJ-50 42-luJ-42 42-guA-21 42-guA-13 42-peS-91 42-tcO-80 42-tcO-72 42-voN-51 42-ceD-40 42-ceD-32 52-naJ-11 52-naJ-03 52-beF-81 52-raM-90 52-raM-82 20 0.24 15 0.16 10 0.08 5 0 0.00 Net liquidity surplus (+)/deficit (-) (RHS) WACR Repo rate SDF rate MSF rate 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM Spread EWMA (RHS)APRIL 2025 Monetary Policy Report Table IV.3: Average Volume and Share in Overnight Chart IV.5: Money Market Rates and Money Market Policy Corridor (₹ lakh crore) 2023-24 2024-25 H1 H2 H1 Q3 Q4 H2 Call/Notice 0.10(2) 0.10(2) 0.10(2) 0.10(2) 0.13(2) 0.11(2) Triparty Repo 2.87(64) 3.14(68) 3.30(68) 3.74(72) 3.51(69) 3.62(70) Market Repo 1.51(34) 1.37(30) 1.48(30) 1.37(26) 1.48(29) 1.42(28) Total 4.47(100) 4.62(100) 4.88(100) 5.20(100) 5.11(100) 5.16(100) Note: Figures in parentheses denote share of each segment in overnight money market. Figures may not add up to total due to rounding off. Sources: Clearing Corporation of India Ltd. (CCIL); and RBI. Money market activity continued to be dominated by the collateralised (tri-party and market repo) segments, with their share in overnight money market volume mostly remaining unchanged at 98 per cent. Sources: Financial Benchmarks India Pvt Ltd. (FBIL); and RBI. (Table IV.3). Mutual funds (MFs) remained the major lenders Fresh issuances of CDs increased to ₹6.6 lakh in the TREPS market, with their share increasing to crore in H2 from ₹5.4 lakh crore in H1:2024-25. 67 per cent in H2 from 65 per cent in H1:2024-25. In Consequently, total outstanding amount of CD the market repo segment, the lending share of mutual issuances reached an all-time high of ₹5.3 lakh crore funds (MFs) increased to 46 per cent in H2 from 41 for the fortnight ending March 21, 2025, as banks per cent in H1:2024-25, alongside a decline in the continued to rely on raising funds through CDs amidst share of foreign banks to 31 per cent from 34 per cent. subdued deposit growth. Within H2, CD issuances On the borrowing side, public sector banks (PSBs) in the shorter tenor (up to 91-days) declined, with remained the dominant players in TREPS, although their share in total issuances reducing to 58 per cent their share reduced to 40 per cent in H2 from 47 per in March 2025 from 68 per cent in October 2024. cent in H1:2024-25. In market repo, however, their Concomitantly, the share of longer tenor CDs (181-365 share increased to 6 per cent from 4 per cent over the same period. days) increased to 40 per cent in March 2025 from 30 per cent in October 2024 (Table IV.4). In the longer-term segments of the money market, rates on commercial paper (CPs) and certificates of Table IV.4: Tenor wise Break up for CD Issuances deposit (CDs) increased during H2 relative to H1:2024- (₹ lakh crore) 25 due to the liquidity tightness in the banking system 2023-24 2024-25 (Chart IV.5). On the contrary, T-bill rates softened H1 H2 H1 Q3 Q4 H2 during the same period. The average spread of CDs Up to 91 Days 2.37(76) 3.76(68) 3.93(73) 1.75(61) 1.99(54) 3.74(57) and CPs over the policy repo rate increased to 91 bps 92-180 Days 0.18(6) 0.18(3) 0.20(4) 0.09(3) 0.08(2) 0.17(3) and 105 bps, respectively, in H2 from 74 bps and 92 181-365 Days 0.58(19) 1.59(29) 1.22(23) 1.02(36) 1.63(44) 2.64(40) bps, respectively, in H1:2024-25. On the other hand, Total 3.13(100) 5.52(100) 5.35(100) 2.86(100) 3.70(100) 6.56(100) the average spread of T-Bills over the policy repo rate Note: Figures in parentheses denote the share of each segment in the moderated to 4 bps from 25 bps during the same overnight money market. Figures may not add up to total due to rounding off. period. Sources: CCIL; and RBI staff estimates. 76 RBI Bulletin April 2025 tnec reP 8.50 8.25 8.00 7.75 7.50 7.25 7.00 6.75 6.50 6.25 6.00 5.75 Triparty repo rate WACR 3-month CD rate 3-month CP rate Market repo rate SDF rate 91-day T-bill rate Repo rate MSF rate 42-rpA-1 42-rpA-02 42-yaM-9 42-yaM-82 42-nuJ-61 42-luJ-5 42-luJ-42 42-guA-21 42-guA-13 42-peS-91 42-tcO-8 42-tcO-72 42-voN-51 42-ceD-4 42-ceD-32 52-naJ-11 52-naJ-03 52-beF-81 52-raM-9 52-raM-82Monetary Policy Report APRIL 2025 Chart IV.6: Primary Issuances of Commercial Paper a: Systemic Liquidity, Issuances and WADR b: CP Spread and Policy Uncertainty Sources: RBI; CCIL F-TRAC; www.policyuncertainty.com; and RBI staff estimates. Resource mobilisation through fresh issuances of Among fresh issuances, the average share of non- CPs increased to ₹8.2 lakh crore during H2 from ₹7.6 banking financial companies (NBFCs) increased to 33 lakh crore in H1:2024-25 (Chart IV.6.a). The weighted per cent in H2:2024-25 from 32 per cent in H1:2024-25. average discount rate (WADR) of CPs increased during In the CP market, corporates were the major players Q4:2024-25 mainly due to liquidity deficit. The spread with an average share of 38 per cent in total issuances of CP rate over T-bills increased before the February during H2:2024-25 (Chart IV.7). 2025 policy rate reduction, mainly attributed to Maturity bucket wise, the 91-180 days segment policy uncertainty amidst tight liquidity conditions had the largest share of fresh CP issuances (Table IV.5). (Chart IV.6.b). Higher issuances of longer tenor CPs during H2 compared to H1 could be attributed to higher investor demand in view of the commencement of an interest rate easing cycle. RBI Bulletin April 2025 77 erorc hkal ₹ tnec reP stniop egatnecreP xednI 4 8.0 7.8 3 7.6 2 7.4 7.2 1 7.0 0 6.8 -1 6.6 6.4 -2 6.2 -3 6.0 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 1.4 200 180 1.2 160 1.0 140 0.8 120 100 0.6 80 0.4 60 40 0.2 20 0.0 0 Average daily liquidity surplus (+)/deficit(-) Issuance WADR (RHS) 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM Spread of 3 Month CP over 91-Day T-bill India Policy Uncertainty (RHS) Chart IV.7: Issuer Profile of Commercial Paper 2.0 1.5 1.0 0.5 0 Sources: RBI; CCIL F-TRAC; and RBI staff estimates. 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM Financial institutions Corporates Housing finance companies NBFCs Limited liability partnership erorc hkal ₹ Table IV.5: Maturity Profile of CP Issuances (₹ lakh crore) Tenor H1: 2023-24 H2: 2023-24 H1: 2024-25 H2: 2024-25 7- 30 days 0.45(6) 0.48(7) 0.63(8) 0.51(6) 31-90 days 3.18(45) 2.32(35) 2.35(31) 2.33(28) 91-180 days 2.75(39) 3.11(47) 3.94(52) 4.24(52) 181-365 days 0.70(10) 0.77(12) 0.64(8) 1.11(14) Total 7.09(100) 6.67(100) 7.55(100) 8.19(100) Outstanding 4.12 3.89 3.98 4.43 (as at end-period) Note: Figures in parentheses denote the share of each maturity profile. Figures may not add up to total due to rounding off. Sources: CCIL; F-TRAC; and RBI.APRIL 2025 Monetary Policy Report IV.2.2 Government Securities (G-sec) Market Government Bonds in the Emerging Market Local Currency Index (EMLCI). Yields traded in a narrow The 10-year G-sec yield moved in the range of 6.62 range during February and remained steady during to 6.86 per cent during H2:2024-25. At the beginning end-February on account of release of Q3 GDP data. of H2, yields hardened, tracking movements in US During March, the yields softened on account of yields and the rise in crude oil prices. Yields, however, lower-than-expected CPI print, liquidity measures softened amidst positive sentiments on the inclusion by RBI, lower than expected April-September central of Indian Government Bonds in the Emerging Market government borrowing calendar, and expectations of Government Bond Index (EMGBI). During November, another rate cut (Chart IV.8). yields softened primarily due to sharp fall of gross domestic product (GDP) growth estimates of Q2 The yields on T-bills hardened during October and anticipation of an early easing of monetary amidst increasing volatility in the global financial policy cycle. markets. During November, they softened at the short The decline in yields continued in December, but end but hardened at the longer end. The hardening it was tempered by the unchanged repo rate and the bias continued in December due to tight liquidity continuation of neutral stance in the December policy. conditions and reduced expectations of rate cuts. Yields rose thereafter, following the Federal Open During January, T-bill rates softened across tenors, Markets Committee’s (FOMC) indication of a slower tracking the decline in domestic yields, and buoyed pace of rate cuts, and thereafter remained steady. by the expectations of policy easing. The softening Beginning January, yields exhibited some moderation, bias continued for a short period in February tracking US yields and buyback announcements by with yields hardening amidst the cancellation of GoI. Yields came down in the latter half of January treasury bill auctions. During March, T-bill rates due to lower-than-expected US CPI inflation print, softened tracking global and domestic developments fall in crude oil prices and the inclusion of Indian (Chart IV.9). Chart IV.8: 10-year Par Yield, Repo Rate and Liquidity Conditions Sources: RBI; and FBIL. 78 RBI Bulletin April 2025 tnec reP erorc hkal ₹ 8.00 3.5 7.75 FOMC, decision on 3.0 Neutral Stance rate cuts 2.5 7.50 Fall in US treasury / Lower US CPI print / fall in Release of GDP data 2.0 7.25 Crude Oil crude oil prices 1.5 1.0 7.00 0.5 6.75 0.0 -0.5 6.50 -1.0 6.25 Rise in US treasury Fall in US treasury Yields -1.5 6.00 -2.0 Lower than expected Q2 -2.5 5.75 GDP data -3.0 5.50 -3.5 Net LAF surplus(+)/deficit(-) (RHS) 10-year Par yield Repo rate 42-tcO-1 42-tcO-8 42-tcO-51 42-tcO-22 42-tcO-92 42-voN-5 42-voN-21 42-voN-91 42-voN-62 42-ceD-3 42-ceD-01 42-ceD-71 42-ceD-42 42-ceD-13 52-naJ-7 52-naJ-41 52-naJ-12 52-naJ-82 52-beF-4 52-beF-11 52-beF-81 52-beF-52 52-raM-4 52-raM-11 52-raM-81 52-raM-52 Lower CPI Print Borrowing CalendarMonetary Policy Report APRIL 2025 21 bps and 26 bps, respectively, in H2 from that in Chart IV.9: FBIL -T-Bill Benchmark H1:2024-25. (Yield to Maturity) The overall dynamics of the yield curve are captured by its latent factors viz., level, slope and curvature7. Yields have softened across the longer end of the term structure as reflected in the downward shift of the yield curve during H2:2024-25 (Chart IV.11.a), with its average level reducing by 8 bps while the slope of the yield curve steepened by 10 bps (Chart IV.11.b). The curvature, on the other hand, declined by 20 bps, reflecting the softening bias in the mid-segment vis-à-vis the short and long term. In the Indian context, the level and curvature of the yield curve are found to have more information content on future macroeconomic outcomes than the slope owing to market segmentation, unlike in The average trading volume in G-secs and AEs (Patra et al, 2022)8. T-bills moderated in H2:2024-25 relative to H1 To facilitate debt consolidation, the Reserve (Chart IV.10). The weighted average yield (WAY) on Bank conducted two switch auctions on behalf of GoI traded maturities for G-secs and T-bills declined by amounting to ₹31,424 crore during H2:2024-25. The 7 The level is the average of par yields of all tenors up to 30-years published by FBIL and the slope (term spread) is the difference in par yields of 3-months and 30-year maturities. The curvature is calculated as twice the 15-year yield minus the sum of 30-year and 3-month yields. 8 Patra, M.D., Joice, J., Kushwaha, K.M., and I. Bhattacharyya (2022), “What is the Yield Curve telling us about the Economy?”, Reserve Bank of India Bulletin, June. RBI Bulletin April 2025 79 tnec reP 6.70 6.55 6.40 6.25 6.10 Tenor Source: FBIL. syaD 7 syaD 41 htnoM 1 shtnoM 2 shtnoM 3 shtnoM 4 shtnoM 5 shtnoM 6 shtnoM 7 shtnoM 8 shtnoM 9 shtnoM 01 shtnoM 11 shtnoM 21 Sep 30, 2024 Oct 09, 2024 Dec 06, 2024 Feb 07, 2025 March 28, 2025 Chart IV.10: Trading Volumes and Yield a: G-sec b: T-bills Sources: CCIL; and RBI staff estimates. erorc ₹ tnec reP erorc ₹ tnec reP 70,000 7.5 9,000 7.5 60,000 7.0 8,000 7.0 7,000 6.5 6.5 50,000 6,000 6.0 6.0 40,000 5,000 5.5 5.5 30,000 4,000 5.0 5.0 3,000 20,000 4.5 2,000 4.5 10,000 4.0 1,000 4.0 0 3.5 0 3.5 H1:2023-24 H2:2023-24 H1:2024-25 H2:2024-25 H1:2023-24 H2:2023-24 H1:2024-25 H2:2024-25 Average daily volume Average daily volume Weighted average yield of traded maturities (RHS) Weighted average yield of traded maturities (RHS)APRIL 2025 Monetary Policy Report weighted average maturity (WAM) of the outstanding inter-state spread on securities of 10-year tenor stock of G-secs increased to 13.24 years as at end- (fresh issuances) was 4 bps in H2 as against 2 bps March, 2025 from 12.96 years at end-September in H1. 2024, while the weighted average coupon (WAC) was lower over the same period (7.25 per cent as against Chart IV.12: SGS - Amount Raised and Spread 7.28 per cent). During H2:2024-25, five buyback auctions were announced for an aggregate amount of ₹1.25 lakh crore with a view to retiring some of the GoI’s debt, particularly in the backdrop of its improved cash position9. The market response to the auctions, however, was modest with the Reserve Bank accepting offers aggregating only ₹0.88 lakh crore against the notified amount of ₹1.25 lakh crore. The weighted average spread of cut-off yields on state government securities (SGS) over G-sec yields of comparable maturities was 30 bps in H2:2024-25 (Chart IV.12) as against 31 bps in H1. The average 9 Although buybacks have a liquidity impact, they should not be construed as liquidity management operations; instead, they are part of an active debt consolidation strategy. 80 RBI Bulletin April 2025 erorc ₹ stniop sisaB 1,00,000 40 90,000 80,000 35 70,000 60,000 30 50,000 40,000 25 30,000 20,000 20 10,000 0 15 Total accepted amount Cumulative weighted average spread (RHS) Source: RBI. tcO-10 tcO-80 tcO-51 tcO-22 tcO-92 voN-50 voN-21 voN-91 voN-62 ceD-30 ceD-01 ceD-71 ceD-42 ceD-13 naJ-70 naJ-41 naJ-12 naJ-82 beF-40 beF-11 beF-81 beF-52 raM-40 raM-11 raM-81 raM-52 Chart IV.11: G-sec Yield Curve a: Shifts b: Changes in Lev el, Slope and Curvature Sources: FBIL; and RBI staff estimates. )tnec reP( dleiY stnioP sisaB 7.30 7.20 7.10 7.00 6.90 6.80 6.70 6.60 6.50 6.40 6.30 Maturity in years 52.0 57.1 52.3 57.4 52.6 57.7 52.9 57.01 52.21 57.31 52.51 57.61 52.81 57.91 52.12 57.22 52.42 57.52 52.72 57.82 52.03 57.13 52.33 57.43 52.63 57.73 52.93 57.04 52.24 57.34 52.54 57.64 52.84 57.94 20 15 10 10 7 5 5 4 1 1 1 0 -5 -1 -2 -3 -10 -8 -8 -11 -15 -12 -20 -20 -25 Sep 30 Oct 08 Dec 05 Feb 06 Cumulative - Oct 08 - Dec 05 - Feb 06 - Mar 28 (Sep 30 - Mar 28) Sep 30, 2024 Oct 09, 2024 Dec 06, 2024 Feb 07, 2025 Mar 28, 2025 Level Slope CurvatureMonetary Policy Report APRIL 2025 Chart IV.13: AAA-rated 3-Year Corporate Bond Yield and Spreads a: Yield b: S pread* Note: * indicates monthly average spreads over G-secs. Source: Fixed Income Money Market and Derivatives Association of India (FIMMDA). IV.2.3 Corporate Bond Market banks; from 102 bps to 106 bps for NBFCs; and from 97 bps to 98 bps for corporates in H2:2024-25 (Chart Corporate bond yields generally softened while IV.13.b). spreads widened during H2:2024-25. Issuer-wise, the average yield on AAA-rated 3-year bonds of public The increase in risk premia was evident across sector undertakings (PSUs), financial institutions (FIs) tenors and rating spectrum amidst moderate corporate and banks softened by 5 bps to 7.48 per cent, while performance in Q3:2024-25 and softer economic those by NBFCs and corporates declined by 14 bps to growth outlook for FY:2024-25 (Table IV.6). In tandem, 7.70 per cent and 18 bps to 7.62 per cent, respectively, the average 3-year credit default swap (CDS) spreads in March 2025 over September 2024 (Chart IV.13.a). that are trading overseas for the State Bank of India and Nevertheless, the risk premium (the spread of 3-year ICICI Bank increased by 2 bps and 4 bps, respectively, AAA corporate bond yields over 3-year G-sec yields) in H2:2024-25 over H1. increased from 71 bps to 83 bps for PSUs, FIs and Table IV.6: Financial Markets - Rates and Spread Interest Rates Spread (bps) (per cent) (over corresponding risk-free rate) Instruments March 2024 September 2024 March 2025 March 2024 September 2024 March 2025 1 2 3 4 5 6 7 Corporate Bonds (i) AAA (1-yr) 7.97 7.92 7.76 77 117 115 (ii) AAA (3-yr) 7.95 7.80 7.62 77 97 98 (iii) AAA (5-yr) 7.74 7.70 7.60 54 86 89 (iv) AA (3-yr) 8.55 8.55 8.43 137 172 178 (v) BBB-minus (3-yr) 12.19 12.14 12.09 500 531 544 Note: Yields and spreads are computed as monthly averages. Source: FIMMDA. RBI Bulletin April 2025 81 tnec reP stniop sisaB 8.5 8.0 7.5 7.0 6.5 6.0 NBFCs Corporates PSUs, FIs & Banks 3-Yr G-sec NBFCs Corporates PSUs, FIs & Banks 32-tcO-50 32-voN-10 32-voN-82 32-ceD-52 42-naJ-12 42-beF-71 42-raM-51 42-rpA-11 42-yaM-80 42-nuJ-40 42-luJ-10 42-luJ-82 42-guA-42 42-peS-02 42-tcO-71 42-voN-31 42-ceD-01 52-naJ-60 52-beF-20 52-raM-10 52-raM-82 110 100 90 80 70 60 50 40 30 20 10 0 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raMAPRIL 2025 Monetary Policy Report Primary issuances of listed corporate bonds in 2024, with the utilisation of the approved limits domestic markets stood at ₹4.2 lakh crore during H2 declining to 15.8 per cent from 16.4 per cent (Chart (up to February 2025) as against ₹4.6 lakh crore during IV.14.b). Secondary market activity, however, picked H1:2024-2510 (Chart IV.14.a). Overseas issuances at up, with daily average trading volume at ₹7,715 crore ₹26,494 crore during H2 were lower than ₹33,952 during H2 (up to February 2025) from ₹6,533 crore crore during H1:2024-25 amidst heightened global during H1:2024-25 (Chart IV.14.c). uncertainty and decline in domestic yields. Almost To address the issue of illiquidity in the secondary the entire resource mobilisation in the corporate market for corporate bonds, the Securities and bond market (99.3 per cent) was through the private Exchange Board of India (SEBI) issued guidelines to placement route (up to February 2025). Outstanding investments by foreign portfolio investors (FPIs) in introduce a liquidity window facility allowing bond corporate bonds stood at ₹1.21 lakh crore at end-March issuers to give investors voluntary put options, which 2025, as against ₹1.18 lakh crore at end-September is the right to sell the bond back to the issuer at specific Chart IV.14: Corporate Bond Market Activity a: Domestic and Overseas Issuances b: FPI Investments in Corporate Bonds Note: Data for domestic issuances is up to February 2025 while data for overseas issuances is up to March 2025; Daily averages are calculated as monthly turnover divided by number of trading days. Sources: SEBI; NSDL; and Prime Database. 10 Issuances in the first half of the financial year are usually lower than in the second half as the borrowing plans of corporates are chalked out gradually. Moreover, central government borrowing is usually frontloaded, which provides greater space to corporates for resource mobilisation in the second half. 82 RBI Bulletin April 2025 erorc hkal ₹ erorc hkal ₹ tnec reP 5.0 4.9 4.6 4.6 3.9 4.2 4.0 3.0 2.8 2.0 1.0 0.0 0.2 0.1 0.3 0.3 0.3 0.0 Domestic Overseas Total investment % of limit utilised (RHS) c: Secondary Market Turnover - Daily Average 32-2202 :1H 32-2202 :2H 42-3202:1H 42-3202 :2H 52-4202 :1H 52-4202:2H 1.4 18.0 1.18 1.21 1.2 1.04 1.03 1.08 17.5 1.0 17.0 0.8 16.5 0.6 16.0 0.4 0.2 15.5 0.0 15.0 32-raM-13 32-peS-92 42-raM-82 42-peS-03 52-raM-82 12,500 11,500 10,500 9,500 8,500 7,500 6,500 5,500 4,500 3,500 erorc ₹ 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beFMonetary Policy Report APRIL 2025 intervals before maturity. Furthermore, the regulator dampened investor sentiments. However, markets also announced the establishment of a centralised recovered in the second half of March amid favourable database for corporate bonds with an objective to global cues and a rebound in FPI inflows. Overall, the create a single authentic source of information on BSE Sensex declined by 8.2 per cent during H2:2024- corporate bonds issued in India. 25 to close at 77,415 at end-March 2025. The broader market indices underperformed the benchmark with IV.2.4 Equity Market the BSE MidCap and BSE SmallCap index shedding The Indian equity market experienced a persistent 15.8 per cent and 18.4 per cent, respectively (Chart decline in H2:2024-25 amidst uncertainty over global IV.15.a). The India Volatility Index (VIX), a measure tariff wars and geopolitical tensions that triggered of short-term expected volatility of Nifty 50, averaged risk-off sentiment and FPI outflows. The benchmark around 14.5 during H2:2024-25, compared to 14.9 in Bombay Stock Exchange (BSE) Sensex declined in H1:2024-25. All the BSE sectoral indices registered October in the wake of FPI selling amidst geopolitical losses during the second half (Chart IV.15.b). strains and weaker-than-expected corporate earnings The average daily notional equity derivatives in Q2:2024-25. Markets pared some of the losses in volume exhibited a declining trend in H2 over late November and early December on favourable H1, pursuant to SEBI’s implementation of specific global cues. Subsequently, markets faced headwinds measures to strengthen equity derivatives framework amidst a global sell-off triggered by changes in the US with effect from November 20, 2024 (Chart IV.16). Fed’s monetary policy outlook for 2025. Net FPI flows in the domestic equity markets The markets began 2025 on a negative note on turned negative in H2:2024-25. In contrast, flows from risk-off sentiment. Moreover, uncertainties regarding domestic institutional investors (DIIs) continued to US policy changes, persistent FPI selling and mixed remain robust. Overall, FPIs were net sellers to the domestic corporate earnings for Q3:2024-25 also tune of ₹2.2 lakh crore while DIIs were net buyers to Chart IV.15: Stock Market Performance a: Benchmark and Broad Indices Performance b. Performance o f BSE Sectoral indices Source: Bloomberg. RBI Bulletin April 2025 83 )001 = 4202 rebmetpeS-dnE( xednI tnec reP BSE Sensex BSE MidCap BSE SmallCap 8.0- 8.2- 4.6- 2.01- 9.01- 7.31- 2.41- 7.41- 2.51- 0.61- 5.71- 3.81- 6.91- 8.91- 1.12- 6.12- 9.12- 3.22- 2.32- 9.32- 0.0 -5.0 -10.0 -15.0 -20.0 -25.0 -30.0 xeknaB secivreS laicnaniF erachtlaeH noitacinummoC lateM secivreS sdooG latipaC TI USP moceleT slairtsudnI GCMF elbaruD remusnoC ygrenE saG & liO yranoitercsiD remusnoC otuA seitilitU ytlaeR rewoP 105 100 95 90 85 80 75 70 42-peS-92 42-tcO-9 42-tcO-91 42-tcO-92 42-voN-8 42-voN-81 42-voN-82 42-ceD-8 42-ceD-81 42-ceD-82 52-naJ-7 52-naJ-71 52-naJ-72 52-beF-6 52-beF-61 52-beF-62 52-raM-8 52-raM-81 52-raM-82APRIL 2025 Monetary Policy Report December, issuances declined significantly in January and February 2025 amidst muted risk sentiment. Out of the total primary market mobilisation during H2 (up to February 2025), amount raised by small and medium enterprises (SME) companies through public issues aggregated ₹4,178 crores as against ₹5,253 crore in H1:2024-25. IV.2.5 Foreign Exchange Market Global foreign exchange market experienced increased volatility during the latter part of 2024- 25, primarily due to rising geopolitical tensions and uncertainties regarding trade policies. The US dollar experienced sharp fluctuations, reaching a two-year high in mid-January 2025 due to expectations of robust US economic growth. It, however, subsequently the tune of ₹3.6 lakh crore in H2 (Chart IV.17.a). On declined, reflecting growing concerns over the a relative basis, i.e., when FPI outflows are measured sustainability of US economic expansion amidst fears with respect to total market capitalisation, outflows of an impending trade war. Emerging market (EM) remained modest so far at 0.5 per cent of the market currencies initially faced depreciating pressures due to capitalisation in comparison to the sell-off of 1 per the strengthening of the US dollar but recovered as the cent witnessed during October 2021 to July 2022. dollar weakened. During this period, the Indian rupee Primary market resource mobilisation in equity (INR) faced downside pressure primarily because of markets remained at ₹2.07 lakh crore during H2:2024- US dollar appreciation. Moreover, persistent FPI 25 (up to February 2025) against ₹2.09 lakh crore in outflows, increasing global economic uncertainty, H1:2024-25 (Chart IV.17.b). After remaining robust till and widening trade deficit added to the downward Chart IV.17: Institutional Investments and Resource Mobilisation a: Net Investment in Indian Equities by b: Resource Mobilis ation in Equity Markets Institutional Investors Note: DII – Domestic Institutional Investors, FPI – Foreign Portfolio Investment, IPO – Initial Public Offer, QIP – Qualified Institutional Placement, FPO – Follow On Public Offer. *: up to February 2025. Sources: Capitaline; NSDL; and SEBI. 84 RBI Bulletin April 2025 erorc hkal ₹ erorc hkal ₹ erorc ₹ 1.0 0.8 0.6 0.4 0.2 0 -0.2 -0.4 QIPs & Preferential allotment IPOs, FPOs & Rights DII FPI SME IPOs/ FPOs (RHS) 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 2.2 6,000 2.0 1.8 5,000 1.6 1.4 4,000 1.2 3,000 1.0 0.8 2,000 0.6 0.4 1,000 0.2 0.0 0 22-1202:2H 32-2202:1H 32-2202:2H 42-3202:1H 42-3202:2H 52-4202:1H *52-4202:2H Chart IV.16: Average Daily Turnover in Equity Derivative Segment BSE NSE Sources: BSE; and National Stock Exchange (NSE). erorc hkal ₹ 600 500 400 300 200 100 0 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 394 389 381 377 399 361 332 335 224 209 192 184 85 100 109 116 124 144 120 107 86 106 103 129Monetary Policy Report APRIL 2025 Chart IV.18: Exchange Rate and Volatility a: Movements of Indian Rupee, US Dollar b: Volality o f INR, US Dollar and EM currency Index and EM Currency Index pressure on the INR. However, the INR staged a Forward premia also exhibited significant recovery in March 2025, supported by FPI inflows fluctuations and remained elevated across all maturities and improved risk sentiments (Chart IV.18.a). The INR during H2:2024-25, reflecting tighter liquidity also experienced heightened volatility, particularly in conditions and heightened global uncertainties Q4:2024-25, mirroring the fluctuations in the global (Chart IV.19.a). It surged notably from November foreign exchange market (Chart IV.18.b). The 1-month 2024 onwards, with the 1-month forward premia at-the-money (ATM) option-implied volatility for the surging above longer-term premia, thus resulting in an INR rose to 3.0 per cent in H2:2024-25 from 2.2 per inversion in the forward premia curve which signalled cent in H1:2024-25. increased near-term uncertainty and volatility on the Several global events contributed to foreign back of rising global risk-off sentiment. While forward exchange market volatility during H2:2024-25, premia remained elevated, it began to decline since including the US elections, tariff announcements and early 2025 due to the RBI’s USD/INR Buy/Sell swap signals from US Fed meetings (Table IV.7). operations to inject durable liquidity into the system Table IV.7: Episodes of Significance in Global and Domestic Exchange Rate Market During H2:2024-25 Appreciation(+) / Depreciation(-) (%) Volatility Measures (%) ₹/US$ US DXY EMCI Index INR 1 ATM 3 Month Forward Volatility Premium Nov 6, 2024 (US Election Results) -0.1 1.6 -0.5 2.1 1.7 Nov 25, 2024 (US Tariff Announcement on Mexico, 0.3 -0.7 0.4 2.2 1.8 Canada and China) Dec 2, 2024 (US Tariff Announcement on BRICS) -0.2 0.7 -0.5 2.8 1.9 Dec 18, 2024 (US FOMC Meeting) -0.01 1.0 -1.0 2.3 2.4 Feb 3, 2025 (Executive Orders on Tariffs) -0.5 0.6 -0.03 3.9 2.9 Feb 4, 2025 (Tariffs Paused for a Month) -0.01 -0.9 0.3 3.7 2.7 Mar 3, 2025 (Paused Tariffs Imposed) 0.1 -0.8 0.2 3.8 2.5 Mar 19, 2025 (US FOMC Meeting) 0.2 0.2 -0.5 3.5 2.6 Sources: FBIL; Refinitiv Eikon; Bloomberg; and RBI staff estimates. RBI Bulletin April 2025 85 )001 = 4202 ,13 hcraM( xednI )001 = 4202 ,13 hcraM( xednI )001 = 4202 ,03 peS( xednI 450 400 350 300 250 200 150 100 50 0 USD/INR 1ATM Implied Volatility ₹/US$ US DXY (RHS) US DXY (30-day moving CoV) Emerging market currency index (RHS) EMCI Index (30-day moving CoV) Note: CoV refers to coefficient of variation. Sources: FBIL; Refinitiv Eikon; and Bloomberg. 42-tcO-30 42-tcO-91 42-voN-40 42-voN-02 42-ceD-60 42-ceD-22 52-naJ-70 52-naJ-32 52-beF-80 52-beF-42 52-raM-21 52-raM-82 106 106 104 104 102 102 100 100 98 98 96 96 94 94 92 92 42-rpA-1 42-rpA-02 42-yaM-9 42-yaM-82 42-nuJ-61 42-luJ-5 42-luJ-42 42-guA-21 42-guA-13 42-peS-91 42-tcO-8 42-tcO-72 42-voN-51 42-ceD-4 42-ceD-32 52-naJ-11 52-naJ-03 52-beF-81 52-raM-9 52-raM-82APRIL 2025 Monetary Policy Report Chart IV.19: Indian Rupee Volatility Measures a: Movements in INR-USD Forward Premia b: USD-INR Ons hore-Offshore Spread before rising during late March. The onshore-offshore occurring in H2:2024-25. Despite this, the INR’s spread for the INR followed a similar pattern, rising depreciation during 2024-25 was relatively modest during Q3:2024-25 in the wake of increased global risk compared to some peer EMEs. aversion before moderating in Q4 (Chart IV.19.b). Volatility also rose across most EM currencies Most major EM currencies depreciated during in H2:2024-25 (Table IV.8). Despite the heightened H2:2024-25 due to a stronger US dollar and heightened global uncertainty, however, the INR remained one of global uncertainty (Chart IV.20). Between end-March the least volatile EM currencies, exhibiting resilience 2024 and end-March 2025, the INR depreciated by 2.6 during turbulent times. per cent against the US dollar, with major depreciation 86 RBI Bulletin April 2025 tnec reP DSU / RNI RNI 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Source: Bloomberg. 42-rpA-2 42-yaM-2 42-nuJ-1 42-luJ-1 42-luJ-13 42-guA-03 42-peS-92 42-tcO-92 42-voN-82 42-ceD-82 52-naJ-72 52-beF-62 52-raM-82 89 1.2 88 1.0 87 86 0.8 85 84 0.6 83 0.4 82 81 0.2 80 79 0.0 1 month 3 months 6 months 12 months 42-rpA-20 42-yaM-20 42-nuJ-10 42-luJ-10 42-luJ-13 42-guA-03 42-peS-92 42-tcO-92 42-voN-82 42-ceD-82 52-naJ-72 52-beF-62 52-raM-82 Onshore-Offshore Spread (RHS) USD INR Spot Rate USD INR NDF 3 M Rate Chart IV.20: Movements in Major EM Currencies tnec reP 15 10 5 0 -5 -10 -15 -20 -25 H1:2024-25 H2:2024-25 2024-25 Note: The movements represent point to point changes over the preceding period. Sources: FBIL; and Refinitiv Eikon. YXD SU osep enitnegrA osep nacixeM aril hsikruT laer nailizarB haipur naisenodnI gnod esemanteiV eepur naidnI osep enippilihP nauy esenihC osep naelihC dnar nacirfA htuoS tiggnir naisyalaM thab dnaliahT elbur naissuR Table IV.8: Month-Wise Volatility of Major EM Currencies* H1: H2: Oct- Nov- Dec- Jan- Feb- Mar- 2024- 2024- 24 24 24 25 25 25 25 25 US DXY 0.9 1.1 0.8 0.7 0.7 0.8 1.7 2.0 Indian rupee 0.1 0.1 0.3 0.4 0.3 0.7 0.3 1.4 Argentine peso 0.6 0.5 0.6 0.7 0.3 0.3 3.5 3.1 Brazilian real 1.9 1.4 1.4 1.8 0.9 1.2 3.8 3.2 Chinese yuan 0.6 0.5 0.2 0.5 0.3 0.2 1.0 1.1 Chilean peso 1.6 1.6 0.9 1.1 1.3 1.1 2.2 2.8 Indonesian rupiah 0.9 0.9 0.9 0.5 0.5 0.6 2.3 2.0 Malaysian ringgit 1.4 2.0 0.6 1.1 0.4 0.3 4.2 1.6 Mexican peso 1.5 1.4 0.9 0.8 0.5 1.1 6.1 1.7 Philippine peso 1.2 0.5 0.7 0.4 0.3 0.3 1.8 1.1 Russian ruble 0.7 1.9 3.3 4.4 5.0 3.0 2.8 7.4 South African 0.6 1.6 2.1 1.0 0.6 0.7 2.5 2.4 rand Thailand baht 0.9 1.7 0.6 1.1 0.6 0.4 3.8 1.3 Turkish lira 0.2 0.3 0.6 0.5 0.6 1.8 2.1 2.9 Vietnamese dong 1.1 0.4 0.1 0.6 0.5 0.2 1.2 0.8 Note: *: Measured by coefficient of variation (CoV). Sources: FBIL; Refinitiv Eikon; and RBI staff estimates.Monetary Policy Report APRIL 2025 In terms of the 40-currency real effective exchange modest relative to REER of some major economies rate (REER), the INR also experienced stress during (Chart IV.21.b). H2:2024-25, depreciating by 1.9 per cent between The financial conditions index (FCI) constructed September 2024 (average) and March 28, 2025. The based on twenty Indian financial market indicators11 depreciation of 40-currency REER in recent months at daily frequency for the period April 1, 2016 to also reflected the narrowing of India’s inflation March 28, 2025 and using the dynamic factor model differential relative to its major trading partners (DFM) approach suggests broad-based tightening (Chart IV.21.a). From a cross-country perspective, the across market segments since early November 2024 depreciation of INR’s 40-currency REER remained (Chart IV.22). Financial conditions eased during March Chart IV.22: Financial Conditions Index G-sec Corporate Bond Forex Equity Money FCI (Standardised) Source: RBI staff estimates. 11 The chosen indicators represent five market segments, namely (i) the money market; (ii) the G-sec market; (iii) the corporate bond market; (iv) the forex market; and (v) the equity market. For details, refer Box IV.2 of the Monetary Policy Report (October 2024). RBI Bulletin April 2025 87 gninethgiT gnisaE 32-01-10 32-01-71 32-11-20 32-11-81 32-21-40 32-21-02 42-10-50 42-10-12 42-20-60 42-20-22 42-30-90 42-30-52 42-40-01 42-40-62 42-50-21 42-50-82 42-60-31 42-60-92 42-70-51 42-70-13 42-80-61 42-90-10 42-90-71 42-01-30 42-01-91 42-11-40 42-11-02 42-21-60 42-21-22 52-10-70 52-10-32 52-20-80 52-20-42 52-30-21 52-30-82 Chart IV.21: Trend in Real Effective Exchange Rate (REER) a: India's 40-Currency REER b: Cross Country Movement in REER (February 2025 over September 2024) Sources: RBI; and BIS. 1.0 0.5 0.0 -0.5 -1.0 tnec reP )001 = 61-5102( xednI Relative Price Effect Nominal Exchange Rate Effect 40-REER (RHS) Change in REER (m-o-m) tnec reP 6 4 2 0 -2 -4 -6 aisenodnI aerA oruE aidnI dnalreztiwS ocixeM napaJ eropagniS acirfA htuoS aisyalaM KU anihC lizarB senippilihP dnaliahT SU anitnegrA aissuR yekruT 3 110 2 106 1 102 0 98 -1 94 -2 -3 90 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beFAPRIL 2025 Monetary Policy Report in the wake of relatively easier conditions in the Chart IV.24: Non-food Credit Growth of SCBs money, equity and forex markets. IV.2.6 Credit Market Bank Credit12 Bank credit growth (y-o-y) moderated during 2024-25. The moderation was seen across bank groups except for public sector banks (PSBs) (Chart IV.23.a). PSBs continued to be the major driver of incremental credit extended by all scheduled commercial banks (SCBs) in 2024-25, while the share for private sector banks (PVBs) declined (Chart IV.23.b). Non-food bank credit of scheduled commercial banks (SCBs) increased at a decelerated pace of 12.0 per cent (y-o-y) as on March 21, 2025, compared to 16.3 per cent a year ago (Chart IV.24). Sector-wise13, bank credit growth to industry deceleration in growth of credit to services sector and remained healthy at 7.3 per cent (y-o-y). While personal loans segments at 13.0 per cent and 14.0 per agricultural credit growth remained in double-digit cent, respectively, in February 2025, they remained at 11.4 per cent in February 2025, it moderated the prime drivers of non-food credit growth during from 20.0 per cent in February 2024. Despite some H2:2024-2514 (Chart IV.25). 12 Data pertain to the last reporting Friday of the month. Data exclude the impact of merger of a non-bank with a bank. 13 Based on data on sectoral deployment of bank credit collected from select scheduled commercial banks, accounting for about 95 per cent of the total non-food credit deployed by all scheduled commercial banks. 14 H2: 2024-25 data up to February 2025. 88 RBI Bulletin April 2025 tnec reP tnec reP 20.0 5.5 17.5 4.0 15.0 2.5 12.5 1.0 10.0 -0.5 7.5 -2.0 5.0 2.5 -3.5 0.0 -5.0 Base effect (RHS) y-o-y growth rate Momentum (RHS) Source: RBI. 22-raM 22-nuJ 22-peS 22-ceD 32-raM 32-nuJ 32-peS 32-ceD 42-raM 42-nuJ 42-peS 42-ceD 52-raM Chart IV.23: Credit Flow across Bank Groups a: Growth b: Share in In cremental Credit Source: RBI. tnec reP 100 1.8 3.6 90 80 46.6 39.1 70 60 50 40 30 57.3 51.7 20 10 0 22-Mar-24 21-Mar-25 Public sector banks Private banks Foreign banks )y-o-y( tnec reP 25 20 15 12.3 10 11.7 5 0 -5 -10 Public sector banks (including regional rural banks) Private banks (including small finance banks) Foreign banks All SCBs 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 13.0 12.1Monetary Policy Report APRIL 2025 Chart IV.25: Sectoral Deployment of Bank Credit a: Non-food Credit Growth: Sector-wise b: Contribution to Non-food Credit Growth 25 20 15 10 5 0 Source: RBI. Credit to MSMEs15 segment remained witnessed a robust growth, while credit to robust, registering a growth of 12.3 per cent in infrastructure sector slowed notably in H2:2024-25 February 2025, however, credit to large industry (Chart IV.26). segment recorded a modest growth in H2. Within Credit growth to services sector moderated in industry, credit to basic metals and all engineering H2, mainly attributed to decelerated credit growth to 15 Refer to credit to micro, small and medium segments within industry. The Union Budget 2025-26 proposed to revise the definition of micro, small and medium enterprises (MSMEs). The investment limit has been raised by 2.5 times for MSMEs classification, while the turnover threshold doubled. The credit guarantee cover for micro and small enterprises has been increased from ₹5 crore to ₹10 crore. Going forward, MSMEs sector is expected to receive boost in credit due to change in classification and priority sector lending treatment. RBI Bulletin April 2025 89 y-o-y ,tnec reP 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF Non-food credit Agriculture Industry Services Personal loans stniop egatnecreP 20 15 10 5 0 Agriculture Industry Services Personal loans 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 14.0 13.0 12.0 11.4 7.3 Chart IV.26: Credit to Industry Sector a: Credit Growth in Industrial Sector b: Credit Growth in Major Sub-sectors of Industry 20 18 16 14 12 10 8 6 4 2 0 Source: RBI. y-o-y ,tnec reP 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF Food processing Textiles Chemicals Basic metal All engineering Infrastructure 2.1 4.1 20 4.0 16 12.3 3.0 12 2.0 8 5.4 1.0 4 0 0 y-o-y ,tnec reP 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF erorc hkal ₹ ni )y-o-y( tiderc latnemercnI 19.0 13.3 9.3 7.1 6.8 1.1 Large industry - Credit growth MSMEs - Credit growth Large industry - Incremental credit (RHS) MSMEs - Incremental credit (RHS)APRIL 2025 Monetary Policy Report NBFCs16. However, credit growth was broadly stable in other major sub-sectors, such as trade, commercial real estate and professional services. Incremental credit (y-o-y) to services sector excluding NBFCs, remained nearly steady in H2 (Chart IV.27). Incremental credit in personal loans segments with unchanged risk weights improved progressively, whereas it moderated for the loan categories with increased risk weights. Housing loans – the largest segment of personal loans – grew at a robust pace despite some moderation, while vehicle loans growth slowed down (Chart IV.28). Irrespective of the moderation, non-food bank credit continued to grow at a healthy pace above the 10-year average y-o-y growth rate (10.5 per cent). Sector-wise, while credit to industry continued to grow for segments with unchanged risk weight, the growth above its long-term average, personal loans recorded rate of targeted sectors, i.e., ‘unsecured personal loans’ moderation. Credit growth in services and agriculture and ‘bank’s credit to NBFCs’ moderated gradually in sectors hovered around their respective long-term response to the regulatory measures undertaken in averages. While credit growth remains broadly intact November 2023 (Chart IV.29 and Table IV.9). 16 The risk weights on the exposures of SCBs to NBFCs’ has been restored to their pre-November 2023 level w.e.f. from April 01, 2025 and the same shall be as per the external rating. Also, microfinance loans in the nature of consumer credit shall be excluded from the applicability of higher risk weights and be subject to a risk weight of 100 per cent. It is expected that credit growth in ‘banks’ credit to NBFCs’ as well as services sector may improve going forward. 90 RBI Bulletin April 2025 )tnec rep ,y-o-y( htworG erorc hkal ₹ ni )y-o-y( tiderc latnemercnI Chart IV.27: Credit to Services Sector 30 8.0 25 6.0 20 15 4.0 10 2.0 5 0 0 Services excluding NBFCs (RHS) NBFCs (RHS) Commercial real estate Trade Services excluding NBFCs NBFCs Professional services Source: RBI. 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF Chart IV.28: Credit to Personal Loans Segment 35 10.0 30 8.0 25 6.0 20 15 4.0 10 2.0 5 0 0 Source: RBI. )tnec rep ,y-o-y( htworG 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF erorc hkal ₹ ni )y-o-y( tiderc latnemercnI Housing Education Vehicle loans Credit card outstanding Segment with increased risk weight (RHS) Segment with unchanged risk weight (RHS) Chart IV.29: Impact of Rise in Risk Weights on Credit Growth Source: RBI. y-o-y ,tnec reP )tnec rep( erahS Targeted sectors Other sectors Non-food credit Other sectors (RHS) Targeted sectors (RHS) 3.12 7.87 35 100 30 80 25 60 20 40 15 12.8 10 12.0 20 7.9 5 0 22-rpA 22-nuJ 22-guA 22-tcO 22-ceD 32-beF 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beFMonetary Policy Report APRIL 2025 Table IV.9: Prudential Measures and Sectoral Credit Growth (y-o-y, per cent) Sectors/Sub-Sectors# Long-Term* Post-COVID** Nov-23 Mar-24 Jun-24 Sep-24 Dec-24 Feb-25 Bank Credit without Merger$ 10.5 14.7 16.3 16.3 13.9 14.4 12.4 12.1^ Bank Credit with Merger$ 10.8 15.9 20.7 20.2 17.4 13.0 11.2 11.0^ Agriculture (13.6) 11.8 15.9 18.1 20.0 17.4 16.4 12.5 11.4 Industry (23.2) 4.1 8.0 5.5 8.0 7.7 9.1 7.4 7.3 Services (30.0) 13.4 18.7 22.2 20.8 15.1 15.2 13.0 13.0 Services excluding NBFCs (20.3) 11.8 18.4 24.3 24.0 18.9 18.1 16.4 16.4 NBFCs (9.7) 19.0 19.6 18.5 15.0 8.2 9.7 6.9 6.6 Personal Loans (33.2) 17.2 18.0 18.7 17.6 16.6 16.4 14.9 14.0 Personal loans segment with unchanged risk weight (21.6) 16.2 16.3 16.2 17.4 18.2 18.5 17.0 16.9 Personal loans segment with increased risk weight (11.6) 19.5 21.5 23.3 18.1 13.7 12.6 11.1 9.0 #: Provisional data, bank credit data is based on Section-42 return. *: 10-year average of y-o-y growth. **: Average of y-o-y growth since April 2022. $: In July 2023, a non-bank was merged with a bank. ^: Pertain to data for the fortnight ended March 21, 2025. Note: Figures in parentheses against each sector denote share in total non-food credit as per the data of the fortnight ended February 21, 2025. Source: RBI. The asset quality of SCBs improved during 2024- Non-SLR17 investments of banks (comprising 25 (up to December 2024), with the overall gross investments in CPs, bonds, debentures, and shares non-performing assets (NPA) ratio declining to 2.5 of public and private corporates) increased by 1.2 per cent in December 2024 from 3.0 per cent a year per cent in H2:2024-25, lower than the expansion of ago (Chart IV.30.a). Asset quality improved across all 4.8 per cent witnessed in H1:2024-25 (Chart IV.31.a). the major sectors (Chart IV.30.b). Growth in adjusted non-food credit (i.e., non-food Chart IV.30: Stressed Assets and Non-Performing Assets of SCBs a: Overall Loan Portfolio of SCBs b: Sectoral Non-Performing Assets 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.1 3.0 2.5 2.0 Source: RBI. 17 Statutory Liquidity Ratio. RBI Bulletin April 2025 91 tnec reP 91-raM 91-nuJ 91-peS 91-ceD 02-raM 02-nuJ 02-peS 02-ceD 12-raM 12-nuJ 12-peS 12-ceD 22-raM 22-nuJ 22-peS 22-ceD 32-raM 32-nuJ 32-peS 32-ceD 42-raM 42-nuJ 42-peS 42-ceD 18.0 16.0 14.0 12.0 10.0 8.0 6.2 6.0 4.0 2.7 2.0 2.3 1.2 0.0 Stressed assets ratio Non-performing assets ratio tnec reP 91-raM 91-nuJ 91-peS 91-ceD 02-raM 02-nuJ 02-peS 02-ceD 12-raM 12-nuJ 12-peS 12-ceD 22-raM 22-nuJ 22-peS 22-ceD 32-raM 32-nuJ 32-peS 32-ceD 42-raM 42-nuJ 42-peS 42-ceD Agriculture Industry Services Retail loansAPRIL 2025 Monetary Policy Report Chart IV.31: Non-SLR Investment and Adjusted Non-Food Credit a: Changes in Non-SLR Investment b: Adjusted Non-Food Credit Adjusted non-food credit (quarterly variation) Commercial paper Bonds / Shares / Debentures Y-o-y adjusted non-food credit growth (RHS) Source: RBI. bank credit plus non-SLR investments by banks) moderated to 7.3 per cent of their net demand decelerated to 11.8 per cent in Q4:2024-25 from 15.5 and time liabilities (NDTL) from 8.5 per cent at per cent in Q4:2023-24 (Chart IV.31.b). end-March 2024 (Chart IV.32). Excess SLR holdings are a component of the liquidity coverage ratio As on February 21, 2025, excess holdings of (LCR). They also provide collateral buffers to statutory liquidity ratio (SLR) securities by SCBs banks for availing funds under the LAF as well as wholesale funding in the TREPS and market repo segments. NBFCs Credit18 Growth (y-o-y) of credit extended by NBFCs decelerated to 13.3 per cent in February 2025 from 18.6 per cent in February 2024 reflecting the impact of increase in risk weights which has now been reversed effective April 01, 2025. NBFCs' credit to industry, the largest segment in terms of outstanding credit, registered a stable growth in H2:2024-25 (up to February 2025). Retail loans accounted for the largest share of incremental credit, followed by industry, services and agriculture (Chart IV.33). 92 RBI Bulletin April 2025 tnec reP 40.0 30,0 20.0 10.0 0 -10.0 -20.0 H1: 2023-24 H2: 2023-24 H1: 2024-25 H2: 2024-25 erorc dnasuoht ₹ 9.0 16.5 15.0 7.5 13.5 12.0 6.0 10.5 9.0 4.5 7.5 3.0 6.0 4.5 1.5 3.0 1.5 0 0.0 erorc hkal ₹ 42-3202:1Q 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4Q Chart IV.32: Excess SLR of Banks 13 60 50 11 40 9 30 7 20 5 10 3 0 *: Data up to February 21, 2025. Source: RBI. LTDN fo tnec reP 22-1202 :1Q 22-1202 :2Q 22-1202 :3Q 22-1202 :4Q 32-2202 :1Q 32-2202 :2Q 32-2202:3Q 32-2202:4Q 42-3202 :1Q 42-3202 :2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q *52-4202:4Q LTDN fo tnec reP Public sector banks Private banks All SCBs Foreign banks (RHS) 18 Data on sectoral deployment of outstanding credit from select NBFCs pertain to last day of every month. As a pilot work, the collection of monthly sectoral credit information from select NBFCs has been initiated. These NBFCs represent around 88 per cent of total credit extended by all NBFCs in upper and middle layers.Monetary Policy Report APRIL 2025 In response to the cumulative 250-bps rate hike during the recent tightening cycle, i.e., May 2022 to January 2025, the 1-year median marginal cost of funds- based lending rate (MCLR) of scheduled commercial banks (SCBs) increased by 178 bps. Consequently, the weighted average lending rates (WALRs) on fresh and outstanding rupee loans increased by 181 bps and 115 bps, respectively, during this period. On deposit side, the weighted average domestic term deposit rates (WADTDRs) on fresh and outstanding deposits increased by 253 bps and 199 bps, respectively, during the same period. After reduction in the policy repo rate by 25 bps in February 2025, banks have adjusted their repo-linked lending rates downward by a similar magnitude. In contrast, the MCLR, that has a longer reset period and is linked to the cost IV.3: Monetary Policy Transmission of funds, may undergo adjustments with some lag. Consequently, the WALR on outstanding rupee loans Transmission to lending rates reached its peak in declined by 7 bps. In case of fresh loans, however, it H1:2024-25 before adjusting downwards thereafter on has increased by 8 bps during February 2025 reflecting account of competition among banks to retain market significant proportion of MCLR-linked loans in it share by reducing the spread (Chart IV.34.a). On the (Table IV.10). other hand, deposit rates have been increasing in the wake of tighter liquidity conditions and higher credit The share of the external benchmark-based demand (Chart IV.34.b). lending rate (EBLR)-linked loans in total outstanding Chart IV.34: Transmission to Bank’s Lending and Deposit Rates a: Lending Rates b: De posit Rates RBI Bulletin April 2025 93 stniop sisaB stniop sisaB 300 250 200 150 100 50 0 Repo Rate WALR-Outstanding Loans Repo Rate WADTDR-Outstanding Deposit WALR-Fresh Loans WADTDR-Fresh Deposit Source: RBI. 22-yaM 22-guA 22-voN 32-beF 32-yaM 32-guA 32-voN 42-beF 42-yaM 42-guA 42-voN 52-beF 300 250 200 150 100 50 0 22-yaM 22-guA 22-voN 32-beF 32-yaM 32-guA 32-voN 42-beF 42-yaM 42-guA 42-voN 52-beF Chart IV.33: Sectoral Credit Growth of NBFCs 245 225 225 189 199 108 y-o-y ,tnec reP erorc hkal ₹ ni tiderC )y-o-y( latnemercnI 35 7.0 30 6.0 25 5.0 20 4.0 15 3.0 10 2.0 5 1.0 0 0 Non-food credit Agriculture Industry Services Retail loans Note: Line diagram on LHS and bar diagram on RHS. Source: RBI. 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beFAPRIL 2025 Monetary Policy Report Table IV.10: Transmission to Banks’ Deposit and Lending Rates (Basis points) Term Deposit Rates Lending Rates Period Repo Rate WADTDR- WADTDR- EBLR 1-Yr. MCLR WALR - WALR- Fresh Deposits Outstanding (Median) Fresh Rupee Outstanding Deposits Loans Rupee Loans Retail Retail Retail Deposits and Bulk and Bulk Deposits Deposits (1) (2) (3) (4) (5) (6) (7) (8) (9) Easing Phase -250 -209 -259 -188 -250 -155 -232 -150 Feb 2019 to Mar 2022 Tightening Period +250 182 253 199 250 178 181 115 May 2022 to Jan 2025 Easing Phase -25 -3 -8 0 -25 0 8 -7 Feb 2025 - Mar* 2025 Memo: Jan- 2025 0 4 -1 2 0 0 7 -1 Feb- 2025 -25 -3 -8 0 -25 0 8 -7 Note: 1. Data on EBLR pertain to 32 domestic banks. 2. Data on WALR and WADTDR pertain to February 2025. WALR: Weighted Average Lending Rate; WADTDR: Weighted Average Domestic Term Deposit Rate; MCLR: Marginal Cost of Funds-based Lending Rate; EBLR: External Benchmark-based Lending Rate. Sources: MPD 06 return & RBI. floating rate loans of SCBs increased to 60.6 per cent (PSBs) (Chart IV.35.a). The share of EBLR-linked loans at end-December 2024 from 56.6 per cent at end- is higher in private banks (PVBs) (Chart IV.35.b). The March 2024. Consequently, the share of MCLR-linked persistence of loans linked to MCLR and other legacy loans declined to 35.9 per cent (Table IV.11). With rates – based on internal benchmarks and having faster adjustments in lending rates, the EBLR longer reset period – acts as an impediment to overall system has quickened the pace of monetary policy monetary policy transmission. transmission. Bank group-wise, the transmission to WALRs on There is still a significant proportion of loans fresh rupee loans of PSBs was higher than that of PVBs linked to MCLR in the case of public sector banks (Chart IV.36.a). Moreover, it was lower for outstanding loans, which could be attributed to the significant Table IV.11: Outstanding Floating Rate Rupee proportion of outstanding loans still linked to the Loans of SCBs across Interest Rate Benchmarks internal benchmark-based lending rate. The lending (Per cent) rates of PVBs remained above those of PSBs (Chart Regime March March March December IV.36.b). The maximum pass-through to lending rates 2020 2022 2024 2024 MCLR 78.3 48.7 39.2 35.9 was witnessed in case of foreign banks, reflecting EBLR 9.1 44.0 56.6 60.6 their higher share of low-cost and wholesale deposits Others 12.6 7.3 4.2 3.5 of lower maturity. Moreover, the higher share of EBLR- Notes: 1. ‘Others’ include benchmark prime lending rate, base rate and linked loans in foreign banks has further enhanced other internal benchmarks. 2. Data pertain to 73 scheduled commercial banks. monetary policy transmission19. Source: RBI. 19 The proportion of EBLR-linked loans was the highest for foreign banks ( 92.2 per cent), followed by private banks ( 85.9 per cent) and public-sector banks ( 44.6 per cent) as at end-December 2024. 94 RBI Bulletin April 2025Monetary Policy Report APRIL 2025 Chart IV.35: Outstanding Floating Rate Rupee Loans of SCBs across Interest Rate Benchmarks a: Public Sector Banks b: Pri vate Banks During February 2025, transmission to WALRs fresh loans of domestic banks declined in the range of on fresh and outstanding loans has been broad-based 8-19 bps in February 2025. During the tightening cycle, across sectors (Chart IV.37.a). The differential pace however, it had increased by 220 bps for education of transmission to different sectors is on account of loans, 203 bps for vehicle loans, 167 bps for MSME loans, and 163 bps for housing loans (Chart IV.37.b). the proportion of credit portfolios linked to fixed and floating interest rates in the sector and the varied Banks have reduced their spreads (difference of WALRs spreads charged by banks. In case of floating rate loans on fresh floating rate rupee loans and their benchmark that are mandatorily linked to EBLR, the WALRs on rate), which moderated the extent of transmission RBI Bulletin April 2025 95 )tnec reP( erahS )tnec reP( erahS 100 90 80 70 60 50 40 30 20 10 0 Sources: RBI. 91-peS 91-ceD 02-raM 02-nuJ 02-peS 02-ceD 12-raM 12-nuJ 12-peS 12-ceD 22-raM 22-nuJ 22-peS 22-ceD 32-raM 32-nuJ 32-peS 32-ceD 42-raM 42-peS 42-ceD 100 90 80 70 60 50 40 30 20 10 0 Base Rate MCLR EBLR Others Base Rate MCLR EBLR Others 91-peS 91-ceD 02-raM 02-nuJ 02-peS 02-ceD 12-raM 12-nuJ 12-peS 12-ceD 22-raM 22-nuJ 22-peS 22-ceD 32-raM 32-nuJ 32-peS 32-ceD 42-raM 42-peS 42-ceD Chart IV.36: Bank Group wise Transmission to Lending Rates a: Transmission to Weighted Average Lending Rates b: Lending Rate s of Domestic Banks Source: RBI. tnec reP tnec reP 350 11 320 10.24 300 10 250 10.00 9.08 200 182 167 181 175 185 175 178 9 150 138 8.68 130 115 8 100 97 50 7 9 4 8 0 0 0 0 -10 -7 -5 -8 -7 -5 6 -50 PSBsPVBs FBs SCBs PSBs PVBs FBsSCBs PSBsPVBs FBs SCBs Fresh rupee loans Outstanding rupee 1-Year median MCLR loans WALR (Fresh rupee loans)-PSBs 1-Year median MCLR-PSBs Tightening Cycle (May 22- Jan 25) Easing Cycle (Feb-25) WALR (Fresh rupee loans)-PVBs 1-Year median MCLR-PVBs 02-tcO 12-beF 12-nuJ 12-tcO 22-beF 22-nuJ 22-tcO 32-beF 32-nuJ 32-tcO 42-beF 42-nuJ 42-tcO 52-beFAPRIL 2025 Monetary Policy Report Chart IV.37: Sector-wise Transmission to WALRs of Domestic Banks a: Transmission to WALR: Sector-wise b: Transmission to W ALR on Fresh Floating Rate (February-2025) Rupee Loans Mandatorily Linked to EBLR Source: RBI. (Table IV.12). For loans that are linked to the policy from real estate and infrastructure to agriculture and repo rate, the spread on fresh rupee loans (WALR over micro loans. NBFCs bring more borrowers to formal the repo rate) was the highest for education loans, financial institutional network, enhancing the reach followed by other personal loans and MSME loans. of the credit channel of monetary transmission. Among domestic bank groups, PSBs charged a lower Monthly data on lending rates of major NBFCs reveal spread than PVBs for housing, vehicles, education, that interest rates charged by NBFCs tend to be higher and other personal loans. In contrast, PSBs charged a as compared to SCBs, inter alia, reflecting their liability higher spread for MSME loans as compared to PVBs. structure and the risk profile of their borrowers. The degree of monetary policy transmission, thus, differs Non-banking financial companies (NBFCs) between NBFCs and SCBs (Chart IV.38). have been playing an increasingly important role in meeting the credit needs of the economy by extending Systemic liquidity developments and the the last mile of credit to hitherto unbanked areas and relatively faster pace of credit growth prompted providing niche financing to various sectors ranging banks to increase their term deposit rates, especially Table IV.12: Spread of WALR (Fresh Loans) over the Repo Rate for Loans linked to External Benchmark (Percentage points) Sectors Apr-22 Feb-25 Public sector Private sector Domestic Public sector Private sector Domestic banks banks banks banks banks banks MSME Loans 4.27 3.93 4.04 3.38 3.37 3.37 Personal Loans Housing 2.91 3.32 3.21 2.15 2.59 2.43 Vehicle 3.37 4.39 3.55 2.68 4.53 3.24 Education 4.42 5.71 4.71 3.79 5.19 4.55 Other personal loans 3.54 7.35 4.01 3.05 5.73 3.42 Note: Other personal loans include loans other than housing, vehicles, education and credit card loans. Sources: RBI; and RBI staff estimates. 96 RBI Bulletin April 2025 stniop sisaB 250 220 203 200 185 163 167 150 100 50 0 -15 -8 -11 -19 -8 -50 Housing Vehicle Education Other MSME loans personal loans Fresh rupee loans Outstanding rupee loans Tightening Cycle (May 22- Jan 25) Easing Cycle (Feb-25) stniop sisaB 30 25 25 21 21 20 16 15 7 8 10 5 0 0 -5 -3 -5 -3 -4 -4 -10 -7 -8 -15 -11 -20 -15 -15 -13 -14 -13 -16 -25 -20 gnisuoH elciheV noitacudE lanosreP rehtO snaoL sEMSM erutlucirgA )egraL( yrtsudnI erutcurtsarfnI edarT lanoisseforP secivreS tropxE eepuR tiderCMonetary Policy Report APRIL 2025 outstanding deposit rates was higher for PSBs than Chart IV.38: Monetary Policy Transmission to PVBs (Chart IV.39.b). The rates on savings bank deposits Outstanding Lending Rates of NBFCs that comprise about 30 per cent of total deposits, however, have remained mostly sticky (Chart IV.39.c). Accordingly, the overall transmission to deposit rates remained low as savings deposit rates remained unresponsive to policy rate changes. In addition, the decline in the share of current account and savings account (CASA) deposits in total deposits, along with the higher transmission to term deposit rates vis-a-vis lending rates have exerted downward pressure on the net interest margins (NIMs) of banks (Chart IV.39.d). The GoI reviewed the interest rates on various small savings instruments, which are linked to secondary market yields on G-secs of comparable in shorter tenor deposits (Chart IV.39.a). Across bank maturities and kept it unchanged for Q1:2025-26. groups, the pass-through to WADTDRs on fresh and With these adjustments, the rates on most of the RBI Bulletin April 2025 97 stniop sisaB 280 230 180 130 80 30 -20 Policy Repo Rate SCBs NBFCs Source: RBI. 22-yaM 22-guA 22-voN 32-beF 32-yaM 32-guA 32-voN 42-beF 42-yaM 42-guA 42-voN 52-beF 225 108 41 Chart IV.39: Deposit Rates and Bank’s Profitability a: Transmission to Fresh Deposits - Tenor Wise b: Transmission to Weighted Average Domestic (May 2022 to January 2025) Term Deposit Rates 300 280 283 275 273 250 250 239 243 200 184 172 150 108 118 100 50 0 c: Savings Deposit Rates of Banks d: Net Interest Margin (NIM) and CASA Share of SCBs stniop sisaB syad 41 - 7 syad 03 - 51 syad 54- 13 syad 09 - 64 syad 081- 19 syad 463 - 181 sraey 2 - 1 sraey 3 - 2 sraey 5 - 3 sraey 8 - 5 sraey 01- 8 Tenor stniop sisaB Tightening cycle (May 22- Jan 25) Easing cycle (Feb 25) 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 tnec reP 02-beF 02-nuJ 02-tcO 12-beF 12-nuJ 12-tcO 22-beF 22-nuJ 22-tcO 32-beF 32-nuJ 32-tcO 42-beF 42-nuJ 42-tcO 52-beF 50 3.9 3.8 45 3.7 40 3.6 3.5 35 3.4 30 3.3 3.2 25 3.1 20 3 Median savings rate (card rates) Weighted average savings deposit rate Repo rate tnec reP 22-raM 32-raM 32-nuJ 32-peS 32-ceD 42-raM 42-nuJ 42-peS 42-ceD CASA Share NIM (RHS) tnec reP 325 276 274 282 275 253 225 204 179 199 189 182 210 175 163 125 125 75 25 1 0 0 2 2 -25 -7 -2 -17 -3 -6 -15 -8 PSBsPVBs FBs SCBs PSBs PVBs FBs SCBs PSBs PVBs FBs SCBs Outstanding deposits Fresh retail deposits Fresh deposits 6.25 3.03 2.75 Source: RBI.APRIL 2025 Monetary Policy Report Table IV.13: Interest Rates on Small Savings Instruments – Q1:2025-26 Small Savings Schemes Maturity Spread Average G-sec Formula based Government Difference (years) (%age point) $ Yield (%) of Rate of Interest Announced Rate (percentage Corresponding (%) (applicable of Interest (%) points) Maturity for Q1:2025-26) in Q1:2025-26 (Dec 2024-Feb 2025) (1) (2) (3) (4) (5) = (3) + (4) (6) (7) = (6) - (5) Savings Deposit - 4.00 - Public Provident Fund 15 0.25 6.85 7.10 7.10 0.00 Term Deposits 1 Year 1 0 6.45 6.45 6.90 0.45 2 Year 2 0 6.50 6.50 7.00 0.50 3 Year 3 0 6.54 6.54 7.10 0.56 5 Year 5 0.25 6.62 6.87 7.50 0.63 Recurring Deposit Account 5 0 6.54 6.54 6.70 0.16 Monthly Income Scheme 5 0.25 6.59 6.84 7.40 0.56 Kisan Vikas Patra 115 months 0 6.85 6.85 7.50 0.65 NSC VIII issue 5 0.25 6.79 7.04 7.70 0.66 Senior Citizens Saving Scheme 5 1.00 6.62 7.62 8.20 0.58 Sukanya Samriddhi Account Scheme 21 0.75 6.85 7.60 8.20 0.60 $: Spreads for fixing small saving rates as per GoI Press Release of February 2016. Note: Compounding frequency varies across instruments. Sources: GoI; FBIL and RBI staff estimates. instruments are now above the formula-based rates in bond yields eased amidst improving inflationary the range 16-66 bps (Table IV.13). outlook and positive global sentiment on India’s economic prospects. Equity market witnessed sharp IV.4 Conclusion correction driven by foreign portfolio investment Domestic financial markets broadly mirrored outflows. The INR traded with a depreciating bias until volatile global financial market conditions in February, recouping some of the losses in March and H2:2024-25. After remaining in surplus in October remaining among the least volatile EME currencies and November, system liquidity turned into deficit during H2. Lending rates adjusted downwards during during the second half of December on account of H2, while deposit rates remained at elevated level. several factors, both domestic and global. The Reserve Going forward, the Reserve Bank will remain agile and Bank took a slew of liquidity augmenting measures nimble in conducting market operations to ensure to ensure orderly market conditions and enhance financial stability while providing adequate liquidity monetary policy transmission. Domestic long-term to meet the productive requirements of the economy. 98 RBI Bulletin April 2025Monetary Policy Report APRIL 2025 V. External Environment V.1 Global Economic Conditions In H2:2024, the global economy remained steady The global economy is growing below its long-term amidst accommodative financial conditions and average, with heightened near-term risks emanating from a rebound in international trade. High frequency implementation of trade restrictive economic policies and indicators for Q1:2025, however, suggest a slowdown evolving geopolitics. Inflation rules above the target for in global economic growth as the output index many economies due to persistence in services sector. of global composite purchasing managers’ index Central banks have cautiously eased monetary policy, but (PMI)1 was the weakest since the last quarter of actions remain divergent. Financial markets remain 2023. The Organizations for Economic Co-operation volatile, impacted by changing growth-inflation and Development (OECD) in its Economic Outlook dynamics. Intensification of protectionist tariffs, Interim Report (March 2025) revised the growth heightened policy uncertainty, lingering geopolitical risks, forecast downwards by 20 bps and 30 bps to 3.1 per and inflation persistence pose downside risks to the global cent and 3.0 per cent for 2025 and 2026 respectively, growth outlook. from its December 2024 projections. The global economy is growing below its long- Amongst the AEs, the US economy grew by 2.4 term average, with near-term outlook shrouded per cent (quarter on quarter, seasonally adjusted with several risks, especially in the wake of recent annualized rates (q-o-q, saar)) in Q4:2024 (lower than reciprocal tariff impositions. Headline inflation the Q3 outturn of 3.1 per cent), supported by increases continues to rule above the target for most economies, in consumer and government spending and fall in with persistent services and core (headline excluding imports, partly offset by a decline in investment food and energy) inflation hindering the pace of (Table V.1). The labour market remained broadly stable disinflation. Many central banks have lowered their averaging 4.1 per cent during October 2024 to March 2025. The Standard and Poor’s (S&P) US composite level of monetary policy restraint but divergence PMI touched a three-month high of 53.5 in March in monetary policy action has increased. Global driven by a strong rebound in the services sector, financial markets remain volatile exhibiting risk-off which surged to 54.4 in March (51.0 in February). sentiment over fluctuating perceptions on the In contrast, growth in manufacturing sector slowed monetary policy trajectory and trade related in March, with the PMI easing to 50.2 from 52.7 uncertainty. Equity markets, that were buoyed by tax in February. cut expectations and resilient data releases in the US, experienced significant sell-off in March and early Real GDP growth in the Euro area moderated April amidst growing trade and policy uncertainty to 0.9 per cent (q-o-q, saar) in Q4 following 1.7 per cent weighing on growth outlook. Bond yields softened growth in Q3 primarily due to decline in inventories, and US dollar retreated in Q1:2025 and early April as gross fixed capital formation and government tariffs announcement stoked fears of global expenditure. Labour markets, however, remained slowdown. resilient, with a historic low unemployment of 1 The references to PMIs are to S&P Global indices, unless specified otherwise. RBI Bulletin April 2025 99APRIL 2025 Monetary Policy Report while manufacturing sector remained in contraction Table V.1: Real GDP Growth (Per cent) zone despite climbing to 26 month-high at 48.6. Country Q1- Q2- Q3- Q4- 2023 2024 2025 2026 The UK economy rebounded, to grow by 0.4 per 2024 2024 2024 2024 (E) (P) (P) Quarter-on-quarter, seasonally adjusted, annualised rate (q-o-q, saar) cent (q-o-q, saar) in Q4:2024 as growth in services Canada 1.8 2.8 2.2 2.6 and construction sector more than compensated for Euro area 1.3 0.7 1.7 0.9 the contraction in production. The labour market Japan -2.1 3.2 1.4 2.2 continued to ease with unemployment rate rising to South Korea 5.3 -0.9 0.4 0.3 4.4 per cent in January from 4.1 per cent in August. UK 3.7 1.8 0.0 0.4 The UK composite PMI climbed to a five-month high US 1.6 3.0 3.1 2.4 of 51.5 in March driven by strong services PMI that Year-on-year rose to 52.5 from 51.0 in February, offsetting the Advanced Economies sharpest drop in manufacturing PMI since November Canada 0.7 1.2 1.9 2.4 1.5 1.3 2.0 2.0 2023 to 44.9. Japan’s GDP growth accelerated to 2.2 Euro area 0.5 0.5 1.0 1.2 0.4 0.8 1.0 1.4 Japan -0.7 -0.7 0.7 1.1 1.5 -0.2 1.1 0.8 per cent (q-o-q, saar) in Q4:2024 from 1.4 per cent in South Korea 3.3 2.3 1.5 1.2 1.4 2.2 2.0 2.1 Q3 over improved business investment and sharp fall UK 0.7 1.1 1.2 1.5 0.4 0.9 1.6 1.5 in imports. However, the composite PMI (au Jibun US 2.9 3.0 2.7 2.5 2.9 2.8 2.7 2.1 Bank) declined to its lowest level since November Emerging Market Economies 2022 to 48.9 in March from 52.0 in February, as Brazil 2.6 3.3 4.1 3.6 3.2 3.7 2.2 2.2 the services PMI slipped to the neutral mark while China 5.3 4.7 4.6 5.4 5.4 4.8 4.6 4.5 manufacturing contracted further. India 8.4 6.5 5.6 6.2 9.2 6.5 6.5 6.5 Indonesia 5.1 5.1 5.0 5.0 5.1 5.0 5.1 5.1 Amongst EMEs, China’s real GDP growth Philippines 5.9 6.5 5.2 5.3 5.5 5.8 6.1 6.3 accelerated to 5.4 per cent year-on-year (y-o-y) in Russia 5.4 4.1 3.1 4.1 3.8 1.4 1.2 Q4:2024, marking the strongest quarterly expansion South Africa 0.6 0.4 0.4 0.9 0.7 0.8 1.5 1.6 in 2024, thus meeting the government’s annual Thailand 1.7 2.3 3.0 3.2 2.0 2.7 2.9 2.6 growth target of around 5 per cent for the full year. Memo: Growth was driven by an expansion in the tertiary World 2023 2024 (E) 2025 (P) 2026 (P) and secondary sectors, supported by a broad range Year-on-year Output 3.3 3.2 3.3 3.3 of government stimulus measures announced since Trade volume 0.7 3.4 3.2 3.3 late September, including a 25 bps rate cut in the E: Estimate P: Projection benchmark lending rate. Growth in the second half Note: India’s data correspond to fiscal year (April-March); e.g., 2024 pertains to April 2024-March 2025. of 2024 was led by booming exports, contributing Sources: Official statistical agencies; Bloomberg; IMF WEO Update, around 45 per cent to the GDP growth in both Q3 January 2025; and RBI staff estimates. and Q4. Industrial capacity utilization also rose by 6.1 per cent in February 2025. In the Eurozone, the 1.1 percentage points in Q4 as compared to Q3. composite PMI in March, rose to 50.9 from 50.2 in Consumption, however, remains a weak spot with February, driven by expansion in services activity its share in GDP falling sharply from 88.3 per cent in 100 RBI Bulletin April 2025Monetary Policy Report APRIL 2025 Q4:2023 to 29.7 per cent in Q4:2024. The composite exports and public capital spending in larger PMI (Caixin) expanded to 51.8 in March 2025 from economies, with growth expected to remain stable 51.5 in February, driven by quicker growth in output in 2025.3 In Q1:2025, growth remained modest across both the manufacturing and services sectors. driven by increased output and new orders amidst a continued downtrend in inflationary pressures. Among other major EMEs, Brazil’s GDP growth moderated to 3.6 per cent (y-o-y) in Q4:2024 vis-à-vis In the BRICS economies, GDP growth for 2025 is 4.1 per cent in Q3, driven by contraction in agriculture projected to moderate, barring South Africa and India sector which was more than offset by expansion in where growth is expected to accelerate and remain the services and industrial sectors. The labour market steady, respectively (Table V.2). The inflation outlook conditions eased as unemployment increased from is also expected to improve for BRICS economies in 6.2 per cent in Q4:2024 to 6.7 per cent in Q1:2025. 2025, softening for those that had higher inflation The composite PMI increased to four-month high of but desirably rising for China, already grappling with 52.6 in March supported by strong growth in sales. deflationary pressures. The South African economy grew at a slightly faster Turning to high frequency indicators, the OECD pace of 0.9 per cent in Q4, compared to 0.4 per cent composite leading indicators (CLIs) for March 2025 in Q3, driven by sharp growth in agriculture sector, showed that most economies remained above the supported by finance and trade industries. However, long-term trend (Chart V.1a). The global composite the composite PMI for South Africa remained in PMI also remained above the neutral mark since contraction territory for the fourth consecutive February 2023 (Chart V.1b). It expanded to 52.1 in month at 48.3 in March as persistent demand March from 51.5 in February, its highest reading in weakness continued to weigh on output and sales. 2025, driven by solid expansion in services sector. Growth in the Russian economy moderated to 3.1 The global manufacturing PMI moderated to 50.3 per cent (y-o-y) in Q3:2024 (4.1 per cent in Q2) in March from 50.6 in February over slowdown in owing to an increase in supply-side constraints. In growth of output and new orders. March 2025, the composite PMI (49.1), slipped below Global merchandise trade volume grew for the the neutral mark after five months of expansion due tenth consecutive month in January 2025, rising to manufacturing PMI which fell to its lowest level sharply by 5.0 per cent (y-o-y). The momentum since April 2022 at 48.2. accelerated to 1.1 per cent, remaining positive for the The ASEAN2 economies demonstrated resilient fourth straight month, as countries front loaded their growth in Q4:2024 driven by higher new orders and imports in anticipation of tariff imposition. EMEs increased output activity. Overall, southeast asian remained the major driver of growth for the eighth economies are expected to have grown at a healthy consecutive quarter in Q4:2024 (October-December). pace in 2024, supported by stronger manufacturing In January 2025, however, the contribution of 2 Association of Southeast Asian Nations (ASEAN) includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. 3 As per Asian Development Bank’s (ADB) Asian Development Outlook December 2024, Southeast Asian economies are projected to grow at a steady pace of 4.7 per cent in 2025 (same as in 2024). RBI Bulletin April 2025 101APRIL 2025 Monetary Policy Report Table V.2: Select Macroeconomic Indicators for BRICS Real GDP growth rate Country 2023 2024(E) 2025(P) General Government Country 2023 2024(E) 2025(P) (y-o-y, per cent) gross debt Brazil 3.2 3.7 2.2 Brazil 84.7 87.6 92.0 (per cent of GDP)# Russia 4.1 3.8 1.4 Russia 19.5 19.9 20.4 India 9.2 6.5 6.5 India 83.0 83.1 82.6 China 5.4 4.8 4.6 China 84.4 90.1 93.8 South Africa 0.7 0.8 1.5 South Africa 73.4 75.0 77.4 CPI inflation rate Country 2023 2024(E) 2025(P) Current account Country 2023 2024(E) 2025(P) (y-o-y, per cent) balance Brazil 4.6 4.3 3.6 Brazil -1.0 -1.7 -1.8 (per cent of GDP) Russia 5.9 7.9 5.9 Russia 2.5 2.7 2.6 India 5.4 4.4 4.1 India -0.7 -1.1 -1.3 China 0.2 0.4 1.7 China 1.4 1.4 1.6 South Africa 5.9 4.7 4.5 South Africa -1.6 -1.6 -1.9 General Government Country 2023 2024(E) 2025(P) Forex reserves* Country 2023 2024 2025 net lending/borrowing (in US$ billion) Brazil -7.6 -6.9 -7.3 Brazil 355.0 329.7 332.5 (per cent of GDP) Russia -2.3 -1.9 -0.5 Russia 598.6 609.1 632.4 India -8.3 -7.8 -7.6 India 622.5 635.7 665.4 China -6.9 -7.4 -7.6 China 3449.7 3455.6 3498.6 South Africa -5.8 -6.2 -6.3 South Africa 62.5 65.5 66.3 E: Estimate P: Projection *: Forex reserves for 2025 pertain to February 2025 for all countries except for India (March 2025). #: Gross debt refers to the nonfinancial public sector, excluding Eletrobras and Petrobras, and includes sovereign debt held by the central bank. Notes: India’s data correspond to fiscal year (April-March) except data on forex reserves which are as per calendar year. India's inflation data for 2024 is from April 2024 to February 2025. Sources: Official statistical agencies; WEO October 2024 database and January 2024 Update, IMF; International Reserve and Foreign Currency Liquidity (IRFCL), IMF; and RBI. AEs in world trade growth increased significantly the global ocean freight container pricing index (Chart V.2a). The Freightos Baltic Global Index – that measures 40-feet container prices – contracted Chart V.1: Survey Indicators a: OECD CLI b: Composite PMI 62 58 54 50 46 Note: For PMI indices a reading above 50 indicates an overall increase compared to the previous month, and below 50 an overall decrease. The indices are seasonally adjusted. Sources: OECD; and Bloomberg. 102 RBI Bulletin April 2025 xednI xednI 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 102 101 100 99 98 97 96 US Euro area UK Japan Brazil Russia India China (Caixin) Global 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM US UK Germany France Japan Brazil India China South AfricaMonetary Policy Report APRIL 2025 Chart V.2: World Trade Volume a: World Trade Volume: Relative Contribution b: World Trade Volume and Freightos Baltic Global Index Sources: CPB Netherlands; Refinitiv Eikon; and RBI staff estimates. sharply by 23.1 per cent (y-o-y) in March 2025 volatile with a downward bias, softening by 1.6 per driven by slowdown in demand from China and an cent due to moderation in metal prices (Chart V.3a). increase in vessel capacity amidst new alliances in The correction was, however, more than offset in the shipping industry (Chart V.2b). The latest WTO’s Q1:2025, when prices rose sharply by 7.7 per cent as Goods Trade Barometer (March 2025) indicates energy and metal prices increased. The trend again that global merchandise trade volume expanded reversed in early April with commodity prices declining at a steady pace through Q4:2024 and is poised to in tandem with increasing global slowdown fears over continue growing in the first few months of 2025. dented demand outlook. According to the Food and According to the IMF’s WEO Update of January 2025, Agriculture Organization (FAO), global food prices global trade volume is expected to grow by 3.2 per edged up by 4.0 per cent (q-o-q) in Q4:2024, driven cent and 3.3 per cent in 2025 and 2026, respectively. by higher vegetable oil and dairy prices. The prices, Nevertheless, the recent wave of tariffs announced however, moderated in Q1:2025 as prices softened by by the US and varied trade responses of countries 0.9 per cent, primarily due to sharp decline in sugar will shape the evolving global trade dynamics going prices, despite higher dairy prices (Chart V.3b). ahead. The initial estimates of WTO indicate that the Crude oil prices rose in the first fortnight of global merchandise trade volume would contract by October, surpassing $80 per barrel due to heightened about one per cent in 2025.4 tensions in the Middle East and Hurricane Milton V.2 Commodity Prices and Inflation in the US. Prices softened and remained subdued In Q4:2024, global commodity prices, as measured thereafter in Q4:2024, hovering in the range of $74- by the Bloomberg commodity price index, remained 76 per barrel, driven by a mix of geopolitical and 4 As per the statement of Director-General of the World Trade Organization (WTO) issued on April 03, 2025. RBI Bulletin April 2025 103 tniop egatnecreP AEs EMEs World trade (per cent, y-o-y) tnec reP )egareva ylhtnoM( xednI 5.0 6.0 5500 4.0 5.0 3.0 4.0 4500 3.0 2.0 3500 2.0 1.0 1.0 2500 0.0 0.0 -1.0 1500 -1.0 -2.0 -2.0 -3.0 500 -3.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jan 2023 2024 2025 World trade (y-o-y) World trade (m-o-m) Freightos Baltic Global Index (RHS) 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raMAPRIL 2025 Monetary Policy Report Chart V.3: Commodity Prices a: Bloomberg Commodity Price Index b: Food Price Indices 115 110 105 100 95 90 Sources: FAO; World Bank; Bloomberg; and PPAC, Ministry of Petroleum & Natural Gas, GoI. economic factors. While receding tensions, less than after imposition of sanctions on Venezuela and Iran expected China’s stimulus measures and ceasefire but plummeted to a 3-year low amidst bleak growth discussion in the Middle East continued to pull prospects and surprise OPEC+ announcement down prices, anticipation of sanctions and escalating (Chart V.3c). Russia-Ukraine conflict led to occasional price surges. Base metal prices declined in Q4:2024 due Prices rebounded in January amidst sanctions on to strengthening of US dollar and weak demand Russia’s energy sector and increased demand due from China, the world’s largest consumer of base to cold weather. Since mid-January, price treaded metals, as Chinese stimulus measures were well downwards following ceasefire in Gaza, increasing below expectations. Prices of most base metals, fears surrounding tariff imposition and higher oil however, edged up in Q1:2025 over China's stimulus supply. The correction continued till the first week announcement in January but plunged after metals of March when OPEC+ announced to commence its evaded further tariffs levy by the US. Gold prices unwinding process.5 Oil prices started rising again surged in October by 4.9 per cent (m-o-m) driven by 104 RBI Bulletin April 2025 xednI 32-naJ-10 32-beF-11 32-raM-42 32-yaM-40 32-nuJ-41 32-luJ-52 32-peS-40 32-tcO-51 32-voN-52 42-naJ-50 42-beF-51 42-raM-72 42-yaM-70 42-nuJ-71 42-luJ-82 42-peS-70 42-tcO-81 42-voN-82 52-naJ-80 52-beF-81 52-raM-13 120 160 110 150 140 100 130 90 120 110 80 100 70 90 60 80 70 50 )001 = 2202 - dne( xednI 32-naJ-10 32-beF-11 32-raM-42 32-yaM-40 32-nuJ-41 32-luJ-52 32-peS-40 32-tcO-51 32-voN-52 42-naJ-50 42-beF-51 42-raM-72 42-yaM-70 42-nuJ-71 42-luJ-82 42-peS-70 42-tcO-81 42-voN-82 52-naJ-80 52-beF-81 52-raM-13 c: Energy and Crude Oil Prices d: Metal Price Indices Gold Copper Aluminium Zinc Iron (RHS) Nickel (RHS) )001=61-4102( xednI )001 = 2202 - dne( xednI 165 155 145 135 125 115 105 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM Food Dairy Vegetable oil Meat Cereals Sugar 100 150 90 140 80 130 70 120 60 110 50 100 40 30 90 20 80 10 70 0 60 utbmm/$SU ,lbb rep $SU 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM xednI Brent WTI Crude Oil Indian basket Natural gas, US Natural gas, Europe Liquefied natural gas, Japan Energy price index (RHS) Natural Gas index (RHS) 5 Voluntary cuts, representing 2.2 million barrels per day, introduced in January 2024 and scheduled to end in June were postponed five times due to lower prices. However, the unwinding process finally began in April 2025 and is expected to be gradually phased out by the end of 2026.Monetary Policy Report APRIL 2025 heightened uncertainty regarding the US elections Table V.3: Consumer Price Inflation and escalating geopolitical tensions. The rally was (Y-o-y, Per cent) more than offset by decline in prices in November and Country Inflation Q1:2024 Q2:2024 Q3:2024 Q4:2024 Q1:2025 Target December as strengthening US dollar and treasury Advanced Economies yields increased the opportunity cost of holding gold, Canada 2.0 ± 1.0 2.9 2.8 2.0 1.9 2.3 causing gold prices to fall by 1.5 per cent (q-o-q) in Euro area 2.0 2.6 2.5 2.2 2.2 2.3 Q4:2024. Thereafter, prices rose sharply in Q1:2025, Japan 2.0 2.6 2.7 2.8 2.9 3.9 gaining 19.5 per cent and surpassing the USD 3,100 South Korea 2.0 3.0 2.7 2.1 1.6 2.1 per ounce mark for the first time, over increased safe UK 2.0 3.5 2.1 2.0 2.5 2.9 haven demand and higher gold purchases by central US 3.3 3.2 2.6 2.7 2.9 (2.0) (2.7) (2.6) (2.3) (2.5) (2.5) banks (Chart V.3d). Emerging Market Economies Consumer Price Inflation Brazil 3.0 ± 1.5 4.3 4.0 4.4 4.8 4.8 Russia 4.0 7.6 8.2 8.9 9.0 10.0 Consumer price inflation remained above the India 4.0 ± 2.0 5.0 4.9 4.2 5.6 3.9 target in many countries as the progress of disinflation China 0.0 0.3 0.5 0.2 -0.1 lost momentum. While core goods inflation has South Africa 3.0-6.0 5.4 5.2 4.3 2.9 3.2 eased, services inflation remains above pre-pandemic Mexico 3.0 ± 1.0 4.6 4.8 5.0 4.5 3.7 levels, especially in advanced economies. The OECD Indonesia 2.5 ± 1.0 2.8 2.8 2.0 1.6 0.6 in its Interim Economic Outlook Report of March Philippines 3.0 ± 1.0 3.3 3.8 3.2 2.6 2.3 2025 revised up its inflation projections by 30 bps Thailand 1.0-3.0 -0.8 0.8 0.6 1.0 1.1 for both 2025 and 2026 to 3.8 per cent and 3.2 per Turkey 5.0 ± 2.0 66.8 72.3 54.4 46.7 39.8 cent, respectively, for G20 economies. Memo: 2023 2024(E) 2025(P) 2026(P) In the US, headline CPI inflation accelerated World consumer price inflation 6.7 5.7 4.2 3.5 from 2.4 per cent in September 2024 to 2.8 per cent E: Estimate P: Projection in February 2025, primarily due to rising shelter Notes: (1) Figures in the parentheses for US are year-on-year change in prices, whereas core CPI inflation moderated to 3.1 personal consumption expenditure (PCE) price index. (2) Inflation numbers for Q1:2025 are upto February 2025 except per cent in February after remaining broadly steady for Euro area, South Korea, Philippines, Thailand, Indonesia at 3.3 per cent from September 2024 to January and Turkey (March 2025). Sources: Central bank websites; IMF; and Bloomberg. 2025 (Table V.3). Inflation in terms of the personal consumption expenditure (PCE) price index – the 2025. In the UK, CPI headline inflation surged by 110 US Federal Reserve’s (Fed) preferred measure of bps to 2.8 per cent in February 2025 from 1.7 per inflation – edged up to 2.5 per cent in February from cent in September 2024, whereas core inflation rose 2.1 per cent in September (Chart V.4a), while core by 30 bps over the same period to 3.5 per cent. In PCE inched up to 2.8 per cent from 2.7 per cent over Japan, headline inflation rose sharply by 120 bps to the same period (Chart V.4b). 3.7 per cent in February 2025 from 2.5 per cent in September 2024. CPI inflation (all items less fresh In the Euro area, CPI inflation increased from 2.0 per cent in October 2024 to 2.2 per cent in March food) also increased by 60 bps – from 2.4 per cent 2025, while core inflation (inflation excluding in September 2024 to 3.0 per cent in February 2025, energy, food, alcohol, and tobacco) moderated to 2.4 while core inflation (inflation excluding both fresh per cent in March after remaining stable at 2.7 per food and energy), rose to 2.6 per cent from 2.1 per cent for five months from September 2024 to January cent over the same period. RBI Bulletin April 2025 105APRIL 2025 Monetary Policy Report 15 11 7 3 -1 Amongst major EMEs, CPI inflation increased inflation movement exhibited divergence for EMEs, in Brazil to 5.1 per cent in February 2025 from 4.4 moderating for some but accelerating for others per cent in September 2024 (Chart V.4c). In Russia, (Chart V.4d). it accelerated from 8.6 per cent to 10.1 per cent Since the October 2024 MPR, the last mile of over the same period due to western sanctions disinflation is getting prolonged with slowdown and shortage of labour driving up wages. In South in disinflation across AEs and most EMEs (Chart Africa, however, inflation receded to 3.2 per cent in V.5a & 5b). February 2025 from 3.8 per cent in September 2024. China experienced positive but low level of inflation, V.3 Monetary Policy Stance hovering in the range of 0.1 per cent to 0.5 per cent Following the synchronous tightening to counter during September 2024 to January 2025, remaining multi-decadal high inflation in 2022-23, central banks subdued mostly because of weak demand and low commenced their policy normalisation from 2023 consumer confidence. In February 2025, however, the CPI declined to (-)0.7 per cent, returning to the and 2024. The pace of easing, however, turned out to deflationary zone and marking its lowest level in be divergent as central banks responded to their own over a year, driven by weak domestic demand. Core evolving growth-inflation dynamics. Most central 106 RBI Bulletin April 2025 tnec reP 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ Chart V.4: CPI Inflation (y-o-y) – Select Economies a: Advanced Economies - Headline b: Advanced Economies - Core c: Emerging Market Economies - Headline d: Emerging Market Economies - Core Brazil Russia China South Africa India tnec reP 7 5 3 1 US (PCE) UK Euro area Japan Target tnec reP 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM US (PCE) UK Euro Area Japan 11 7 3 -1 tnec reP 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 11 9 7 5 3 1 Brazil Russia China South Africa India Note: For India, core CPI, i.e., CPI excluding food and fuel is worked out by eliminating the groups 'food and beverages' and 'fuel and light' from the headline CPI. Sources: Official statistical agencies; Bloomberg; and RBI staff estimates. 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raMMonetary Policy Report APRIL 2025 Chart V.5: Last Mile of Disinflation a: Advanced Economies b: Emerging Market Economies Japan 1.7 India -0.4 0.5 1.5 Euro -0.3 0.2 South Africa -1.3 -0.7 UK -0.3 0.8 Russia 4.6 6.1 2.1 US 0.5 Brazil 0.1 1.4 -1 0 1 -2 0 2 4 6 Per cent Per cent February 2025 Inflation Deviation from Target February 2025 Inflation Deviation from Target September 2024 Inflation Deviation from Target September 2024 Inflation Deviation from Target Notes: 1. For Euro Area, inflation print pertains to March 2025. 2. For Brazil, India and South Africa the target is taken as the mid point of their inflation control target range. Sources: Bloomberg; and RBI staff estimates. banks have become less restrictive but continue Federal Open Market Committee (FOMC) expected to remain vigilant and data dependent for future the target range for the federal funds rates to be at decisions. Nonetheless, the extent of divergence 3.75-4.00 per cent by end 2025, indicating a further increased further in the second half of 2024 and 50 bps rate cut in 2025, unchanged from its December early 2025 as some countries continued with their 2024 projection. easing cycle, some remained watchful at relatively The European Central Bank (ECB) continued to lower levels of policy rates while a few pre-emptively ease its policy rate, lowering the deposit facility rate started hiking to stem any surge in inflation. (DFR) by 25 bps each in all its four meetings held during The US Fed initiated easing cycle in September October 2024 - March 2025, cumulatively reducing the 2024, lowering the target range for the federal funds benchmark rate by 150 bps since it began its easing rate by 50 bps to 4.75-5.00 per cent (Chart V.6a). In cycle in June 2024. The ECB reiterated that it would its two subsequent meetings, i.e., in November and follow a data-dependent and meeting-by-meeting December, it reduced the federal funds rate by 25 approach to determine the appropriate monetary bps each lowering it to 4.25-4.50 per cent. In 2025, policy stance. Besides, with the principal payments however, the policy rate was left unchanged in both from maturing securities being no longer reinvested, the January and March meetings. In its March 2025 both Asset Purchase Programme (APP) portfolio and meeting, the Fed noted that uncertainty around the Pandemic Emergency Purchase Programme (PEPP) economic outlook had increased and announced its plan to slow down the pace of quantitative tightening portfolio continue to shrink at a predictable pace. programme.6 As per the Summary of Economic The Bank of England (BoE), however, has been more Projections released in the March meeting, the gradual in its easing cycle, reducing its policy rate in 6 Beginning in April, the FOMC would slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion per month to $5 billion per month. The Committee would, however, maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion per month. RBI Bulletin April 2025 107APRIL 2025 Monetary Policy Report Chart V.6: Policy Rate Changes – Select Major Economies a: Advanced Economies b: Emerging Market Economies Source: Bloomberg. every alternate meeting between August 2024-March in its November 2024 meeting, by 25 bps each in its 2025. Based on the evolving view of the medium-term December 2024 and January 2025 meetings and held outlook for inflation, the BoE indicated a gradual it constant in its March meeting. The Swiss National and careful approach to the further withdrawal of Bank also lowered its policy rate by 50 bps in its monetary policy restraint. December meeting and 25 bps in its March meeting. The Czech National Bank reduced its key rate by 25 Amongst other major AEs, the Bank of Canada bps in its November 2024 and February 2025 meetings lowered its policy rate during Q4:2024 and Q1:2025 but held it constant in December 2024 and March by 150 bps, cumulatively. During all the meetings in 2025 meetings. Norges Bank, however, is yet to begin Q4:2024, the Reserve Bank of New Zealand (RBNZ) its policy normalisation process and has maintained a and the Bank of Korea (BoK) reduced their benchmark status quo during its Q4:2024 and Q1:2025 meetings. rates by 50 bps and 25 bps, respectively. In Q1:2025, Bank of Israel also kept its policy rate unchanged however, the BoK pared its policy rate by 25 bps in during these quarters, although it had reduced its February following a pause in January while the RBNZ policy rate once in January 2024. In contrast, the continued to ease its policy rate by 50 bps. The Reserve Bank of Japan (BoJ), after raising its key rate by 15 bps Bank of Australia initiated its policy easing cycle in in July, paused in its subsequent meetings in 2024. In February 2025, reducing its key rate by 25 bps to 4.10 its January 2025 meeting, however, the BoJ resumed per cent, after an extended pause since December policy hiking, raising the policy rate by 25 bps while 2023. The Central Bank of Iceland embarked on policy keeping it steady in March. easing by reducing its key rate by 25 bps in October 2024 and by 50 bps in all its subsequent meetings. In In the BRICS economies, the Banco Central do March, however, it tempered its pace to 25 bps. The Brasil, which had initiated the policy tightening cycle Sveriges Riksbank lowered the policy rate by 50 bps in September 2024, continued to raise its Selic rate 108 RBI Bulletin April 2025 stniop sisaB stniop sisaB 50 0 0 -25 -100 -75 -75 -100 -150 -150 -175 -175 -200 -225 -300 -300 H1:2024 Q3:2024 Q4:2024 Q1:2025 H1:2024 Q3:2024 Q4:2024 Q1:2025 SU KU aera oruE napaJ adanaC nedewS yawroN cilbupeR hcezC ailartsuA dnalaeZ weN dnalecI aeroK htuoS 500 450 300 250 150 0 -25 -35 -75 -75 -25 -150 -200 -225 -300 -325 -350 -450 -425 Brazil Russia India China South Africa Mexico Chile Hungary Philippines Colombia Indonesia PeruMonetary Policy Report APRIL 2025 by 50 bps in November 2024 and by 100 bps each but maintained status quo in October, December, in the month of December, January and March. February and March. Among European EMEs, The South African Reserve Bank cut its repo rate Hungary and Poland kept their policy rates unchanged by 25 bps each in its November 2024 and January in all meetings held during Q4:2024 and Q1:2025 2025 meetings, followed by a pause in the month (Chart V.6b). of March. In continuation of the slew of measures V.4 Global Financial Markets announced in September, the People’s Bank of China Global financial markets remained volatile since lowered its one-year Loan Prime Rate (LPR) and over- the final quarter of 2024 gyrating sharply with every five-year LPR by 25 bps each to 3.1 per cent and 3.6 incoming information as the outlook was shrouded per cent, respectively, in October 2024. Since then, in economic, political and trade policy uncertainty. it has maintained status quo in all subsequent Market sentiment has been largely conditioned by meetings but indicated that the reserve requirement shifting expectations regarding monetary policy ratio and interest rates may be further cut depending on the domestic and external economic conditions. amidst fast changing growth-inflation outlook. The Bank of Russia increased its policy rate by 200 Equities broadly shed gains since the last MPR but bps in October but maintained status quo thereafter, remained volatile throughout, increasing amidst keeping the key rate elevated at 21.00 per cent amidst resilient economic indicators, expectations of tax inflationary pressures. cuts and AI driven rally in China, but retreating due to risk-off sentiment and tariff induced disruptions. Among Asian EME central banks, the Bank of In Q4:2024, bond yields had increased, and the US Thailand lowered its benchmark rate for the first dollar had appreciated in tandem with political time in October 2024 by 25 bps followed by a pause in transition in the US and uncertainty surrounding December but again reduced by 25 bps in its February geopolitical developments. In Q1:2025, however, 2025 meeting. The Bank Indonesia maintained status the adverse implications of such increased quo on its key rate in Q4:2024, followed by a 25 bps economic uncertainty came to the forefront denting cut in January and pause in subsequent meetings. consumer and corporate sentiments and igniting The central bank of Philippines cut its policy rate growth concerns causing bond yields in the US to by 25 bps in every alternate meeting since October decline and US dollar to depreciate. EME financial 2024, cumulatively lowering its key rate by 75 bps markets remain particularly vulnerable to spillovers since the commencement of the rate easing cycle in from such shocks and the associated uncertainty August 2024. In Latin America, the Banco de Mexico that increases the trade-offs and complicates the reduced its benchmark rate by 50 bps in Q4:2024 conduct of monetary policy (Box V.1). Accordingly, and by 100 bps in Q1:2025. The central bank of EME currencies depreciated in the fourth quarter of Colombia gradually moderated its pace of monetary 2024 although recovering partially in the first quarter policy easing by paring its benchmark rate by 50 bps of 2025. in October 2024 and 25 bps in December, followed by a pause in 2025 so far. Chile lowered its policy Equity markets, in terms of the Morgan Stanley rate by 25 bps in each of its meetings in Q4:2024 Capital International (MSCI) world index, remained but paused in Q1:2025. Peru cut its reference rate volatile in the last quarter of 2024 shedding 1.2 by 25 bps each in November and January meetings per cent in Q4:2024 with EME equity markets RBI Bulletin April 2025 109APRIL 2025 Monetary Policy Report underperforming relative to those of AEs (Chart V.7a). administration’s policies would boost growth, In Q1:2025, equity markets extended their sell-off but lower taxes, and reduce regulation. Equity markets, with reversing trends as EMEs outperformed their AE however, witnessed an intermittent correction in counterparts. Among AEs, the US S&P 500 remained mid-November post strong economic data releases buoyant for the most part of October, spurred by the and hawkish Fed commentary causing readjustments unusually aggressive beginning of the rate-cutting in the monetary policy trajectory (Chart V.8a). The cycle by the US Fed, followed by turbulence amidst correction persisted through mid-January 2025, election-related uncertainty. Nonetheless, as the as odds of one or no rate cuts by December 2025 election outcome unveiled, US stock market rallied in increased. Optimism over the US exceptionalism and November driven by expectations that the incoming strong corporate earnings fuelled an equity market Box V.1: Geopolitical Spillover Shocks on Financial Markets of EMEs Geopolitical tensions and heightened uncertainties owing stock market meltdown, exchange rate depreciation, and to conflicts, wars including trade wars and related tensions rising risk premia (Caporale and Menla-Ali, 2024), with have been a defining feature of the global landscape over heterogenous effects on advanced and emerging markets the last few years, with its deleterious impact on the (Choi, 2025). global economy drawing increasing attention of policy To gauge the economic ramifications of geopolitical makers and researchers. Such systemic geopolitical shocks reinforce “flight home effect” (Feng et al., 2023), risks (GPR), the GPR Index (Chart V.1.1), which captures leaving the financial system vulnerable, especially in the episodic fluctuations linked to major geopolitical EMEs. Geopolitical events can escalate risk aversion, events (Caldara and Iacoviello, 2022)7, is used to prompting shifts in investment portfolios, triggering assess the impact on stock markets, credit spreads (Contd.) 7 The Geopolitical Risk Index captures global risks by analysing geopolitical-related content in 10 major global newspapers. The index is calculated using a dictionary-based method by counting the number of articles related to adverse geopolitical events in each newspaper for each month (as a share of the total number of news articles). 110 RBI Bulletin April 2025 selcitrA lla fo erahS egatnecreP Chart V.1.1: GPR Index 10 9 8 7 6 5 4 3 2 1 5102 5102 5102 6102 6102 7102 7102 7102 8102 8102 9102 9102 0202 0202 0202 1202 1202 2202 2202 2202 3202 3202 4202 4202 Russian invasion of Ukraine Israel-Hamas war Paris terrorist attack China-India Social unrests in border dispute South America Source: Caldara and Iacoviello, 2022.Monetary Policy Report APRIL 2025 Chart V.1.2: Impact of GPR shocks a: Stock Market b: Foreign Exchange Market c: Credit Spread 1 2 2 5 1 0 0 0 -2 -5 -1 -4 -1 -2 0 1 2 3 4 5 6 0 1 2 3 4 5 6 0 1 2 3 4 5 6 Orthogonalized IRF Notes: Shaded region of the OIRFs indicate 68 per cent confidence interval using Newey-West standard errors. x-axes represent months and y-axes represent percentage points. Source: RBI Staff estimates. and exchange rates of EMEs using monthly data8 and uncertainty, keeping the risks elevated. The findings spanning 10 years (January 2015 to January 2025). Using are broadly robust to alternate lags and controls. the local projections model (Jordà, 2005), the movement Thus, the geopolitical shocks entail risks to financial in each financial market segment for the subsequent stability in EMEs, underscoring the need for strategic six months is predicted. The orthogonalized impulse policy measures to enhance resilience by building on response functions (OIRFs) evaluate the impact of a one- their fundamentals and mitigating vulnerabilities. unit increase in the GPR Index on EMEs stocks, bonds and currency markets, after employing appropriate controls References: (Chart V.1.2). 1. Caldara, D., & Iacoviello, M. (2022). “Measuring The results indicate that a one percentage point rise in Geopolitical Risk”. American Economic Review, 2022. the GPR Index leads to a significant deterioration in EME 2. Caporale, G.M., & Menla-Ali, F. (2024). “Geopolitical financial conditions, causing stock markets to decline by Risk and Cross-Border Portfolio Flows: Effects and 0.25 percentage points, currencies to depreciate by 0.16 Channels”. CESifo Working Paper No. 11337. percentage points, and credit spreads to widen by around 3. Choi, S., & Havel, J. (2025). “Geopolitical risk and U.S. 1 basis point in the first month, reflecting enhanced risk Foreign Portfolio Investment: A Tale of Advanced and premia during periods of high geopolitical uncertainty Emerging Markets”. Journal of International Money and consequent flight to safety. The effect peaks in the and Finance, 2025. second month in all three market segments, with stock markets shedding gains by 0.64 percentage points, 4. Feng, C., Han, L., Vigne, S., & Xu, Y. (2023). “Geopolitical currencies depreciating by 0.32 percentage points and Risk and the Dynamics of International Capital credit spread worsening by around 1.2 basis points by the Flows”. Journal of International Financial Markets, end of the second month. The effect, thereafter, gradually Institutions & Money, January 2023. peters out. Nevertheless, the repeated occurrence of such 5. Jorda, O. (2005). “Estimation and Inference of Impulse geopolitical shocks that impinges on the economy with Responses by Local Projections”. The American differential impact has lent a persistence to the turmoil Economic Review, March 2005. 8 The MSCI Emerging Markets Index, the MSCI Emerging Markets Currency Index and the J.P. Morgan EMBI Global Spread are used to track equity markets, foreign exchange markets and credit spread in the emerging markets, respectively. RBI Bulletin April 2025 111APRIL 2025 Monetary Policy Report rally briefly in the later half of January. After turning European stocks underperformed in Q4:2024 cautious in February, markets corrected sharply in as tariff fears induced market correction but have markedly outperformed its peers in Q1:2025 amidst March amidst preliminary fears of stagflation and ECB rate cut expectations, increased odds of a Russia- increasing policy uncertainty (Chart V.8b). Overall, Ukraine peace deal, a stronger economy in France the US S&P index rose by 2.1 per cent during Q4:2024 passing its contentious 2025 budget and Germany’s but pared gains to the tune of 4.6 per cent during fiscal overhaul. The UK’s stock indices broadly Q1:2025. tracked the European markets, though with a smaller Chart V.8: Sources of Uncertainty: Monetary and Economic Policy a: Target Rate Probability for Federal b: US Uncertainty Indicators Reserve Meeting on 10 Dec 2025 Sources: Bloomberg; and RBI staff estimates. Notes: 1. In Chart V.8a, red shaded area represents the period with receding multiple rates cut expectations. 2. In chart 8a, baseline re fers to no change in policy rate of the US while the pace of rate cut is assumed to be 25 bps. 112 RBI Bulletin April 2025 xednI xednI 100% 80% 60% 40% 20% 0% Baseline 1Cut 2Cuts 42-voN-80 42-voN-51 42-voN-22 42-voN-92 42-ceD-60 42-ceD-31 42-ceD-02 42-ceD-72 52-naJ-30 52-naJ-01 52-naJ-71 52-naJ-42 52-naJ-13 52-beF-70 52-beF-41 52-beF-12 52-beF-82 52-raM-70 52-raM-41 52-raM-12 52-raM-82 550 5,000 450 4,000 350 3,000 250 2,000 150 1,000 0 50 TradePolicyUncertaintyIndex EconomicPolicyUncertainty Index(RHS) )001=3202-dne( xednI 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM Chart V.7: Equity Markets a: Equity Indices (MSCI) b: Change in Equity Indices 120 115 110 105 100 95 90 World AEs EMEs Sources: Bloomberg; and RBI staf f estimates. 42-naJ-60 42-naJ-13 42-beF-52 42-raM-12 42-rpA-51 42-yaM-01 42-nuJ-40 42-nuJ-92 42-luJ-42 42-guA-81 42-peS-21 42-tcO-70 42-voN-10 42-voN-62 42-ceD-12 52-naJ-51 52-beF-90 52-raM-60 52-raM-13 Euro area (Euro Stoxx 50) -2.1 7.2 Japan (Nikkei) 5.2 -10.7 UK (FTSE) -0.8 5.0 US (S&P 500) -4.6 2.1 Brazil (Ibovespa) -8.7 8.3 India (Sensex) -7.3 -0.9 China (SSE Index) -0.5 0.5 South Africa (JSE Index) -2.8 5.4 -12 -8 -4 0 48 Per cent Q4:2024 Q1:2025 decnavdA tekram gnigremE seimonoce seimonoceMonetary Policy Report APRIL 2025 magnitude, performing well in Q1:2025, supported broadly hardened between October 2024-March by higher odds of rate cut by the BoE. The Japanese 2025. The German 10-year yields also firmed up market outperformed the US market in Q4:2024 as since Q4:2024 and even more so in March after the yen weakness towards the end of 2024 bolstered the fiscal stimulus announcement. The 10-year Japanese Government bond yield firmed up by 63 bps (as on earnings outlook for large-cap exporters, but retreated March 31, 2025) since October, driven by the BoJ’s in 2025 as policy normalisation by the BoJ led to policy normalization, including its stance on further appreciation of the yen. Barring China, EME equities rate hikes contingent on its economic outlook (Chart corrected in Q4:2024, tracking global cues and trade V.9a). During October 2024-March 2025, bond yields policy uncertainty (Chart V.7b). In 2025 so far, EME in several EMEs exhibited an upward movement, equity markets exhibited mixed trends as they gained driven by domestic fiscal conditions and global ground supported by waning currency depreciation factors (Chart V.9b). In contrast, bond yields in China pressures but declined following global cues amidst eased amidst expectations of further monetary policy increased uncertainty and idiosyncratic factors. easing, while India’s bond yield remained relatively Sovereign bond yields across most major AEs stable during this period with a softening bias. hardened since Q4:2024 in response to expectations In the currency market, the US dollar appreciated of a firmer future path of interest rates amidst sticky by 9.1 per cent between October 2024 and its peak on inflation and rising economic policy uncertainty. In January 13, 2025 – the highest level since November the US, bond yields hardened in Q4:2024 with the 10- 10, 2022 – driven by several factors arising from the year treasury yield rising by 79 bps due to a revision in policies of the new US administration. Investors the dot plot projection to 50 bps rate cut by the end of swiftly adjusted their portfolios in anticipation of the 2025 as against 100 bps earlier. In Q1:2025, however, yields softened, driven by fears of growth slowdown, change in trade and tariff policies, as the inflationary market corrections and shifting perceptions of policy impact of tariffs could prompt the US Fed to adopt rates and fiscal deficit. The UK 10-year bond yields a more cautious stance on rate cuts. At the same RBI Bulletin April 2025 113 tnec reP Chart V.9: 10-Year Sovereign Bond Yields a: Select AEs b: Select EMEs 5 4 3 2 1 0 US UK Japan Germany Source: Bloomberg. 42-naJ-60 42-naJ-13 42-beF-52 42-raM-12 42-rpA-51 42-yaM-01 42-nuJ-40 42-nuJ-92 42-luJ-42 42-guA-81 42-peS-21 42-tcO-70 42-voN-10 42-voN-62 42-ceD-12 52-naJ-51 52-beF-90 52-raM-60 52-raM-13 Brazil India China South Africa tnec reP 14 12 10 8 6 4 2 0 42-naJ-60 42-naJ-13 42-beF-52 42-raM-12 42-rpA-51 42-yaM-01 42-nuJ-40 42-nuJ-92 42-luJ-42 42-guA-81 42-peS-21 42-tcO-70 42-voN-10 42-voN-62 42-ceD-12 52-naJ-51 52-beF-90 52-raM-60 52-raM-13APRIL 2025 Monetary Policy Report time, heightened trade tensions clouded the global V.5 Conclusion economic growth outlook, and anticipated stricter Global growth faces considerable headwinds immigration policies raised inflation concerns, all due to intensification of protectionist tariffs and leading to portfolio rebalancing in favour of US assets. heightened policy uncertainty. The sweeping tariff Since mid-January, however, the dollar has retreated announcement by the US and ensuing retaliation from its multi-year high, amidst high frequency by other countries risk escalating into a full-blown trade war, potentially disrupting the existing global indicators signalling a lacklustre growth momentum, supply chains. These supply chain disruptions may elevated policy uncertainty and non-realisation further hinder the stalling disinflation process, thus of other economic policies that had previously impeding the process of monetary policy easing. fuelled appreciation pressures (Chart V.10a). These EMEs face considerable downside risks including movements were mirrored in the EME currencies, burgeoning capital outflows, increasing risk premium though the upswings were capped due to capital and deepening external vulnerabilities. Besides, the outflows (Chart V.10b). The MSCI Emerging Market recent financial market rout could just be a preview, Currency Index depreciated sharply in Q4:2024 (3.6 showcasing the cascading effects of changing trade per cent) but rose by 1.7 per cent in Q1:2025. policies. 114 RBI Bulletin April 2025 )001=3202-dne( xednI Chart V.10: Currency Movements and Capital Flows b: Portfolio Flows to EMEs Sources: Bloomberg; Institute of I nternational Finance (IIF); and RBI Staff Estimates. noillib $SU a: Currency Indices 108 106 104 102 100 98 42-naJ-60 42-naJ-13 42-beF-52 42-raM-12 42-rpA-51 42-yaM-01 42-nuJ-40 42-nuJ-92 42-luJ-42 42-guA-81 42-peS-21 42-tcO-70 42-voN-10 42-voN-62 42-ceD-12 52-naJ-51 52-beF-90 52-raM-60 52-raM-13 12 6 0 -6 -12 -18 -24 MSCI EME Currency Index US Dollar Index Debt Equity Total 42-naJ-3 42-naJ-82 42-beF-22 42-raM-81 42-rpA-21 42-yaM-7 42-nuJ-1 42-nuJ-62 42-luJ-12 42-guA-51 42-peS-9 42-tcO-4 42-tcO-92 42-voN-32 42-ceD-81 52-naJ-21 52-beF-6 52-raM-3 52-raM-82SPEECHES Keynote address at the 24th FIMMDA-PDAI Annual conference Shri Sanjay Malhotra Welcome Address at the RBI@90 commemoration function on April 1, 2025 Shri Sanjay Malhotra Address at the Private Sector Collaborative Forum of the Financial Action Task Force (FATF) Shri Sanjay Malhotra Shared Vision, Shared Responsibility – Strengthening NBFCs Shri Swaminathan JKeynote address at the 24th FIMMDA-PDAI Annual Conference SPEECH Keynote address at the 24th twice and provided sufficient liquidity. In view of the rapidly evolving situation, especially on the global FIMMDA-PDAI Annual front, we are continuously monitoring and assessing Conference* the economic outlook. We will be agile and proactive in our actions on the policy front, as always. Shri Sanjay Malhotra Coming to the Indian financial markets, all market segments including FX, G-sec, Money Markets, have It is a pleasure to be here at the 24th FIMMDA- largely remained stable. While the Rupee came under PDAI Annual Conference in Bali, an island that a bit of pressure a few months ago, it has fared better shares a deep and rich heritage with India, marked by thereafter and regained some lost ground. Equity centuries of cultural and commercial ties. markets experienced significant correction, as capital outflows accelerated, a trend seen in most emerging The past year has been eventful for financial markets. The government securities market has markets globally. The initial optimism that global however, remained rock-steady throughout the year. central banks were poised for synchronised easing The gross market borrowings of the central and state of interest rates, seemingly reaching the final stage governments, totalling ₹24.7 lakh crore in FY 2024- in their battle against high inflation, gave way to 25, sailed through smoothly. The cost of borrowing unprecedented uncertainty in recent months. In for the central government came down by 28 basis this backdrop, this conference provides an excellent points to 6.96 per cent in FY25 from 7.24 per cent in opportunity for a fruitful exchange of ideas and vibrant FY24. The secondary market in g-secs continued to be discussions among financial market participants. I deep and active, partly aided by India’s inclusion in thank the organisers FIMMDA and PDAI for giving me global bond indices. this opportunity to participate in the conference and share my thoughts. Meanwhile, we stand at the threshold of an exciting phase of transformation in India – a The Indian economy and the financial markets transformation that has faced many challenges, have demonstrated remarkable resilience while but is imbued with exciting opportunities – our they are not immune to the vagaries of an uncertain demographic dividend, our skilled manpower and and volatile global environment. As I mentioned our ability to develop and harness technology to in my statement post the recent monetary policy transform society. Against this backdrop, the theme of announcement, our domestic growth-inflation this year’s conference — “India’s Financial Markets: balance has improved significantly. There has been Navigating Through Shifting Tides” is timely and a decisive improvement in headline inflation which relevant. is projected to remain aligned to the target of 4 per cent in FY26. Global uncertainties and weather Financial markets – looking back and forging ahead disturbances, however, pose risks to the inflation If India is to navigate the shifting tides and fulfil outlook. Even though we have projected a somewhat its aspirations, financial markets will have to play lower real GDP growth for FY26 at 6.5 per cent, India a crucial role. As the marketplace for raising capital is still the fastest growing economy. Yet, it is much and trading financial assets, financial markets are key below what we aspire for. We have reduced repo rates enablers of economic growth. Financial markets have * Delivered in Bali on April 18, 2025 existed for centuries. They have evolved over time. RBI Bulletin April 2025 115SPEECH Keynote address at the 24th FIMMDA-PDAI Annual Conference The complexities of financial markets have baffled Financial markets: Recent trends humanity for centuries with one of history’s greatest Over the past few years, we have witnessed minds, Sir Isaac Newton, after losing his fortune in significant developments that have transformed our the South Sea Bubble, famously lamenting that “I can markets into a dynamic and resilient force. Let me calculate the motions of the heavenly bodies, but not give a few statistics to illustrate: the madness of people.”1 Integrity of operations and • 80 per cent increase in average daily volumes the fostering of trust are fundamental to any financial in the overnight money markets from about market. Indeed, ensuring these elements is one of ₹3 lakh crore in 2020 to over ₹5.4 lakh crore the primary objectives of financial market regulation. in 2024; While, we realise as Benjamin Graham said that in the short run, market is a voting machine, but in the long • 40 per cent increase in average daily volumes run, we have to ensure that it is a weighing machine. in the g-secs markets to ₹66,000 crore over the same period; In India, financial markets have evolved within a • Almost doubling of average daily turnover in regulated framework, adapting to changing regulatory the forex market from 32 billion USD in 2020 philosophies and approaches. Up until the last to 60 billion USD in 2024; decade of the 20th century, India’s financial markets were shaped by a conservative macro-financial • 622 per cent increase in notional outstanding stance. From the 1990s, the foundation of robust interest rate derivatives from around ₹18 and well-functioning financial markets started being lakh crore in 2015 to over ₹130 lakh crore at built. Interest rates were deregulated. The exchange the end of FY25; rate was freed. The Rupee became fully convertible • 2,233 per cent increase in average daily client on the current account. The capital account was volumes in MIBOR OIS (the most liquid progressively liberalised. In the years that followed, derivative product) from approximately ₹600 even as the financial markets in India developed, the crore in 2015 to nearly ₹14,000 crore in 2024; overarching approach was driven by the priorities • 73 per cent growth in average daily volumes of macroeconomic and financial stability. In recent in FX forwards and swaps from US$ 15 years, however, our growing and more interconnected billion to over US$ 26 billion over the last economy placed increasing demands on financial decade; and markets. • Daily volumes of about US$ 7 billion in Against this backdrop, the Reserve Bank’s efforts Non-deliverable forward (NDF) trades by in recent years to develop financial markets have domestic banks in recent months compared focused on supporting the needs of an aspirational to negligible volumes on June 1, 2020, when economy. I won’t go into the details, as the audience it was first permitted. here is well-versed in the various regulatory changes The number of participants in the markets have that have been brought about in recent years. Instead, also increased concomitantly: I will focus on what we have accomplished and the work that still lies ahead. • Several standalone primary dealers have been granted Authorised Dealer licences. 1 Brunnermeier, M., and Reis, R. (2023). “A Crash Course on Crises: Macroeconomic Concepts for Run-ups, Collapses, and Recoveries”. The set of eligible market-makers has been 116 RBI Bulletin April 2025Keynote address at the 24th FIMMDA-PDAI Annual Conference SPEECH expanded for the interest rate and credit We have made significant strides in the derivative markets though interest here development of financial markets in our country. appears muted. Motivated to fulfil the nation’s evolving needs and aspirations and guided by learnings from successive • In the last decade, the number of clients crises, our markets have matured and advanced. Our registered with the CCIL Trade Repository market infrastructure is state-of-the-art. The levels of for interest rate derivatives has increased transparency are at par with the best in the world. by about 3,233 per cent from about 300 to Markets for government securities, foreign exchange, nearly 10,000 and for foreign exchange and key derivative products are highly liquid, relative derivatives by 3,854 per cent from 2,200 to to most peer economies and even to many advanced about 87,000. Of course, not all clients will countries. With recent regulatory reforms, we have be active participants. seen greater product and participant diversity, and • Non-resident participation has also increased the onshore and offshore markets have become in the g-sec market especially after the tightly integrated. inclusion in global bond indices. Foreigners These advancements are a testament to your now hold 3.2 per cent of g-secs as compared dedication, innovation, and collaborative efforts. I to 1.7 per cent in August 2023, ahead of congratulate all of you for your contributions in this the first announcement of the inclusion. joint endeavour. Today, we have vibrant financial Non-resident participation in the derivative markets which not only continue to support India’s markets has also been growing. economic growth but also inspire global confidence. There have been significant developments in But there is more to be done. Let me briefly outline financial market infrastructure as well. Repo and my thoughts on some of these areas. government securities markets predominantly Issues and concerns function on electronic platforms, and are centrally cleared. Most forex spot and forward transactions The Government securities market as well as most MIBOR and Modified MIFOR based The g-sec market is perceived as one of the most interest rate swaps also trade on electronic platforms liquid markets globally as evidenced by low bid-ask and are centrally cleared. All OTC derivatives are spreads and low impact cost. However, the turnover reported to a trade repository. ratio (measured as the annual turnover to outstanding There is also growing product diversity. While stock of securities) of dated government securities has plain-vanilla products dominate the derivative remained modest at just over one (1). If the less liquid markets, there has been a noticeable rise in state government securities (SGSs) are included, the customized products in both interest rate and forex ratio falls to below one (1). Liquidity continues to derivatives, tailored to meet the diverse hedging needs remain concentrated in few securities, thinning out of various stakeholders. Recently, forward contracts for longer maturities. Secondary market trading is in government securities have also been permitted. dominated by banks and primary dealers with many The approach to structured products, particularly large institutional investors remaining “buy and hold” those with asymmetric payoffs, has remained investors. Of the 3,000 plus institutional investors in cautious and responsible. We plan to continue the g-secs, the top ten participants contributed a third of same approach. the overall turnover during 2024. RBI Bulletin April 2025 117SPEECH Keynote address at the 24th FIMMDA-PDAI Annual Conference One continuing endeavour of the Reserve Bank with sole access to RBI’s liquidity facilities, the call has been to increase retail participation in the g-sec money market and the repo markets – to ensure that market. The launch of ‘RBI Retail Direct’ facility in RBI’s liquidity measures are promptly and seamlessly November 2021, was one initiative in this direction. transmitted to the broader market. Recently, a mobile app for Retail Direct has been The FX markets introduced. RBI also recently permitted retail clients The foreign exchange markets are reasonably of SEBI-registered non-bank stockbrokers to access liquid with narrow bid-ask spreads. There is growing NDS-OM. All of this makes it imperative to ensure transparency in this market. All FX derivatives are that sufficient secondary market liquidity is available reported to the Trade Repository and reporting of to such investors to be able to participate in the cash, tom and spot transactions has commenced2. A market at reasonable prices. Liquidity and pricing bulk of FX spot transactions are traded on electronic also need to improve for participants like cooperative trading platforms (ETPs). Authorised trading banks, pension and provident funds with smaller platforms are also available for forward transactions deal sizes. Banks and primary dealers may need to but there appears to be a preference for such trades play a much more active role to this end. to take place bilaterally. Trading on ETPs enhances The Money Markets transparency and market efficiency. We would like to see an increasing share of transactions done on ETPs. The money markets in the country remain almost entirely overnight. Despite many efforts over the In January 2020, banks were permitted to deal in FX beyond onshore market hours. While volumes years to develop a term money market, for example are not significant, we do see banks transacting by removing statutory pre-emptions on inter-bank both prior to and post onshore market hours. Such liabilities and by conducting term repos/reverse repos trading, however, is largely confined to the period of varying maturities, term markets remain missing immediately before and after domestic FX market especially in the 3 days to three months segment. hours, suggesting that we are still some distance Though alternatives such as overnight indexed swap away from a true 24*5 market. rates and yields on treasury bills are being used, there remains a need for the development of a risk-free Fair treatment of customers and transparency in term structure to act as a benchmark for pricing of forex pricing for the smaller and less sophisticated interest rate products, including loans. customers continues to engage our attention. Much more can be and needs to be done here. Divergence The dwindling liquidity in the call money market in pricing in FX markets for the small and large – whose rate is the operating target for monetary customers are far wider than what can be justified by policy – also requires attention. This market is operational considerations. FX-Retail, a transparent also critical for the robustness of the MIBOR, the platform for undertaking FX transactions, has benchmark for the interest rate derivative market. witnessed a lukewarm response and our feedback Also of concern are the asymmetries which arise on is that this is largely due to the reluctance of banks occasions between different money market rates– the 2 In terms of notifications RBI/2024-25/89/FMRD.MIOD.07/02.05.002/ rate at which RBI provides liquidity, the call money 2024-25 dated November 8, 2024, on “Reporting of Foreign Exchange rate, the market repo rate and TREPS rate. This calls Transactions to Trade Repository”, Authorised Dealers have started to report all inter-bank FX contracts undertaken by them to the Trade for more proactive functioning by banks – the entities Repository of CCIL with effect from February 10, 2025. 118 RBI Bulletin April 2025Keynote address at the 24th FIMMDA-PDAI Annual Conference SPEECH to offer the platform to their customers. There market depth, add to the diversity of views and foster are regulations in place to ensure transparency in greater competition and efficiency. Meanwhile, pricing for retail customers including a mandate developments elsewhere, including the need for for disclosing the mid-market or interbank rate to more proactive management of risks by different customers. As an industry, there is a need for market- stakeholders, have made the further development of makers to introspect and assess in what ways they can these markets an imperative. effectively deliver on these regulatory and fiduciary In this context, you are aware that an increasing mandates. number of bank loans are getting priced off external The Reserve Bank has recently announced that benchmarks, mostly the policy repo rate. The swap access to FX Retail will also be provided through the market based on an overnight rate may not be best Bharat Connect platform. In the first phase, a pilot suited to hedge such exposures especially as it is also to facilitate purchase of US dollars by individuals is used to express views on expected monetary policy planned. Subsequently, its scope will be expanded movements. As was observed by the Committee on based on the experience gained. I would appeal the MIBOR Benchmark, most developed countries to all the financial market participants including have at least two major benchmarks – one used to take Authorised Dealers to extend their full cooperation a view on the future movements of the policy rate and in ensuring that the pilot is implemented smoothly another used by the real sector to hedge risks. At least, and successfully. a market for basis swap instruments needs to develop to manage the associated basis risks. The Committee We also continue to see banking channels being also recommended the development of a Secured used for activities on unauthorized FX trading Overnight Rupee Rate (SORR) based on the secured platforms. This calls for greater vigilance and stronger overnight market. I understand that the Financial efforts by banks to create awareness among their Benchmarks India Limited (FBIL) is developing the customers about the perils of using such platforms3. benchmark. Going forward, derivatives based on the The derivative markets SORR will also need to be developed. The size of the derivatives market, while growing, Concluding remarks remains small in absolute terms and relative to our Today, financial markets stand at a cusp of GDP. There are other issues apart from that of size. transformation between global and domestic The liquidity in the interest rate derivative markets, headwinds, unprecedented opportunities and for example, is limited to one or two products. growing public expectations. When transformations Despite many efforts over the years, the interest such as these take place, there are many moving parts rate futures market or the credit derivative market which need to come together like the pieces of a jigsaw are yet to pick up. Market-making remains confined and many stakeholders who have critical roles to play. to banks, both in FX and interest rate derivatives. FIMMDA and PDAI have been playing critical roles in While this is not surprising, given that the Indian fostering the development of Indian financial markets. financial system is bank-dominated, the presence of a In many ways though not formally so, FIMMDA has wider variety of players has the potential to enhance functioned as a self-regulatory organization (SRO) in 3 The Reserve Bank, on its part, has been regularly updating the Alert the fixed income and money markets of the country. List of unauthorized forex trading platforms and conducting awareness campaigns to educate users. I am aware that FIMMDA has applied for recognition RBI Bulletin April 2025 119SPEECH Keynote address at the 24th FIMMDA-PDAI Annual Conference as an SRO under the framework for the recognition of ensure fairness to every stakeholder as they chart the SROs in financial markets issued by RBI. While we ahead and make themselves robust, resilient, and are examining the request, we expect to see FIMMDA future-ready. and PDAI continue partnering with us in further As I conclude, I invite you to reflect on the developing financial markets in India. intricate and dynamic wheels of finance that shape As India forges ahead to take its rightful place not only our markets but the very foundation in the emerging global order, financial markets of India’s economy. These wheels, powered by have a crucial role to play. Financial markets transparency, trust, and innovation, require each cog will need to facilitate efficient and cost-effective — every participant in this room — to perform its funding for realising the aspirations of the country. role with purpose and integrity. Let us move forward They will need to enable the economic agents to with a shared commitment to manage risks wisely, manage their risks more efficiently amidst shifting foster growth responsibly, and ensure the integrity of global and domestic tides. They will also need to our financial markets. Thank you. 120 RBI Bulletin April 2025Reserve Bank of India at the RBI@90 commemoration SPEECH function on April 1, 2025 Reserve Bank of India at the ceremony that was graced by the Hon'ble Prime Minister. Throughout the year, we organized several RBI@90 commemoration high-level events on themes such as emerging function on April 1, 2025* technologies and Digital Public Infrastructure. The Conference of Central Banks from the Global South Shri Sanjay Malhotra reinforced India's thought leadership in the global community and deepened our understanding of the challenges and opportunities ahead. Her Excellency, the President of India, Hon'ble Governor of Maharashtra, Hon'ble Chief Minister To engage with the public, we hosted nationwide of Maharashtra, Hon'ble Union Minister of initiatives such as the RBI@90 Quiz, which received Communications, Hon'ble Deputy Chief Ministers of enthusiastic participation from students across Maharashtra, distinguished invitees, representatives the country. We organized an art competition that of the media, and my colleagues from the Reserve celebrated the creativity and heritage of India's artistic Bank, past and present. traditions. Sporting events, town hall meetings, tree plantation drives, and blood donation camps brought It is my privilege to welcome you all on this together our employees and communities. momentous occasion marking the 90th anniversary of the Reserve Bank of India. We are deeply honoured All these events reinforced the spirit of collaboration and service that define the Reserve by the participation of the Hon’ble President of Bank. We celebrated our past and reaffirmed our India. Her gracious presence has greatly enhanced responsibility for the future. We reflected on our the importance of this occasion and encouraged us achievements and rich legacy and recommitted immensely. I am thankful to her for taking out time ourselves to realising the vision of a Viksit Bharat built from her busy schedule for us. I warmly welcome on a stronger, more stable, and inclusive financial her to this function. I also welcome His Excellency, system. the Governor of Maharashtra, the Honourable Union Minister of Communications, the Chief Minister and As we mark this milestone, we recognize that the Deputy Chief Ministers of Maharashtra. I also the Reserve Bank's role has expanded significantly warmly welcome all other dignitaries and guests who beyond its initial mandate. Today, we stand at the confluence of tradition and transformation, where the have taken out time to be present here with us. imperatives of price stability, financial stability, and Ninety years ago, the Reserve Bank of India economic growth intersect with rapid technological was established to serve as the custodian of India's advancements, global uncertainties, challenges of monetary and financial stability. Over these nine climate change and increasing public expectations. decades, we have evolved, adapting to the changing The next decade will be crucial in shaping the economic landscape while remaining committed to financial architecture of our economy. We remain the economic progress of our nation and the welfare committed to expanding and deepening financial of its people. inclusion. We shall strive to foster a culture of As we entered the 90th year, exactly one year continuous improvement in customer services and ago, we initiated the celebrations with the opening strengthening customer protection. It will be our endeavour to optimize our regulatory frameworks * Welcome Address by Shri Sanjay Malhotra, Governor, Reserve Bank of India at the RBI@90 commemoration function on April 1, 2025 by balancing the interests of financial stability and RBI Bulletin April 2025 121SPEECH Reserve Bank of India at the RBI@90 commemoration function on April 1, 2025 efficiency. We will continue to support technology decision, driven by an unwavering resolve to serve the and innovation. We shall remain vigilant, adaptive, interests of the people, the financial system, and the and forward-looking. We will continue to collaborate economy. effectively with all stakeholders – governments As we conclude this year-long celebration and step and financial sector regulators, among others. We into our centenary decade, we do so with confidence, will do everything that is required to improve the determination, and a clear vision. The journey ahead financial system by expanding its access, enhancing will demand continuous adaptation and agility; its efficiency, and strengthening its resilience in an fresh thinking and innovation; collaboration and evolving economic landscape. coordination; and an unwavering commitment to excellence and perfection. We, at the Reserve Bank, Even as we embrace new technologies and modern remain fully prepared to meet all challenges and regulatory approaches, our core values - integrity, seize all opportunities, to contribute proactively and transparency, and commitment to public service - will vigourously, to India's economic progress. continue to guide us. The trust that the people of India With these words, I again welcome Her Excellency, repose in the Reserve Bank is our greatest asset. We the President of India, and all other dignitaries and are determined to preserve it and further strengthen guests to this commemorative event. it in the years ahead. This institution belongs to the nation. We shall continue to take each and every Thank you. Jai Hind. 122 RBI Bulletin April 2025Private Sector Collaborative Forum of the Financial Action Task Force (FATF), SPEECH March 26, 2025, Mumbai Private Sector Collaborative mutual evaluation by the FATF. India was placed in the ‘regular follow-up’ category, a distinction shared by Forum of the Financial Action only a few other G20 countries2. This is a recognition Task Force (FATF), March 26, of our effective AML and CFT framework. It demonstrates our commitment to AML and CFT. This 2025, Mumbai* is a result of many years of building and continuously improving and strengthening the financial system of Shri Sanjay Malhotra our country. This was possible due to the collaborative It is a pleasure to be here at the Private Sector efforts of all stakeholders, led by the Government Collaborative Forum (PSCF) 2025 of the Financial of India including financial entities and designated Action Task Force (FATF). I am happy to note that this non-financial businesses and professions in the is the first time that the forum is being held in India. private and public sector, regulators, and the state I thank FATF for giving us this opportunity. In my governments. The private sector plays a vital role in previous role as the Secretary in the Department of keeping the financial systems secure. Their role in Revenue, Ministry of Finance, Government of India, I implementing due diligence procedures, conducting had the opportunity of being closely associated with robust risk assessments, monitoring transactions, and the FATF during our mutual evaluation last year. reporting suspicious activities is critical for preventing About FATF the abuse of the financial system. They identify FATF, the standard setting body for illicit financing suspicious activities and help government agencies in has come a long way since its establishment in 1989. destroying illicit financial networks. Over the years, it has evolved from an organisation Strong public-private partnerships form the with only 16 members to a global forum with 40 bedrock for safeguarding the integrity of the financial members. Through the FATF-styled regional bodies1, system. In India, we recognize the importance of its reach is even wider. The standards developed by close cooperation between public and private sector FATF are used by over 200 jurisdictions to combat stakeholders in achieving these goals. Reserve Bank money laundering (ML), terrorism financing (TF) of India, as the regulator and supervisor of a large and proliferation financing. The implementation segment of the financial system in India has diligently of the standards has played an important role in and consistently worked towards building and strengthening the global financial system and making ensuring implementation of a strong AML and CFT the world a safer place. framework in this segment of the financial system, in line with FATF recommendations. The Reserve Bank India’s Mutual Evaluation by FATF has taken several initiatives to enhance cooperation India accords immense importance to Anti-Money and coordination with various stakeholders. Similarly, Laundering (AML) and Countering the Financing the Financial Intelligence Unit (FIU)-India has also of Terrorism (CFT). Last year, India underwent the set up FPAC3, a public-private cooperation forum for * Address by Shri Sanjay Malhotra, Governor, Reserve Bank of India at 2 https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2056773 the Private Sector Collaborative Forum of the Financial Action Task Force 3 FIU-India Initiative for Partnership in AML/CFT(FPAC), a public- (FATF), March 26, 2025, Mumbai. private partnership (PPP) framework, was launched in January 2022, to 1 In addition to its own 40 members, FATF is also supported by nine facilitate collaboration between FIU-India and other stakeholders in the FATF-styled regional bodies (FSRBs). AML/CFT domain. RBI Bulletin April 2025 123SPEECH Private Sector Collaborative Forum of the Financial Action Task Force (FATF), March 26, 2025, Mumbai facilitating closer interaction and collaboration. It & humanitarian channels, risk-based approach to has also supported the setting up of ARIFAC4 - a cross supervision, digitalization & information sharing, sectoral forum for the private sector reporting entities beneficial ownership and countering of proliferation to collaborate among themselves. financing, will also be exciting. Let me outline some of my thoughts for the forum on these areas. It is a result of these collaborative efforts that we have been able to build and demonstrate a robust First, while we all continue to make our financial and resilient AML and CFT framework. I compliment systems safe and secure against money laundering all the stakeholders, especially, the regulated entities and terror financing, we as policy makers need to be in the financial sector as well as the designated non- mindful that our measures are not over-zealous and financial businesses and professions for the successful do not stifle legitimate activities and investments. You mutual evaluation. would appreciate that multiple laws and rules, each with their own level of granularity cast a high level However, as all of you are aware, the threats from of burden of compliance on the regulated financial money laundering and terror financing to the national service providers. This is relevant in the context of and global financial systems are continuously evolving AML-CFT too. Therefore, we need to have laws and and becoming more sophisticated. This is primarily regulations which, with surgical precision, target due to technological advancements. In order to only the illegitimate and illicit, rather than use them effectively counter these threats, we need to continue the close cooperation among various stakeholders - as blunt tools which unintentionally hurt even the government agencies, financial entities in both the honest. public and private sectors, civil society, and others. Similarly, even while implementing the legal The mutual evaluation process was rigorous and framework and regulations, we need to keep in detailed. While providing us with valuable insights mind the impact on persons and businesses. Risk- into our strengths, it has highlighted some areas based approach is recommended in this regard. But of improvement in our AML-CFT framework. We let us keep in mind that this is only a step forward are determined to further strengthen our financial in reducing compliance burden. Let us appreciate system to deter and combat illicit financial activities that it is not the ultimate solution, as any risk-based taking into consideration the recommendations made approach is not perfect; it would have false positives during the evaluation. We will continue to strive for and false negatives. We need to continuously refine continuous improvement in this regard. and improve our risk assessment models to make them robust. Some thoughts on the Agenda for PSCF 2025 To make these improvements, we need to I am told that yesterday’s sessions were very improve the quality of our data and harness emerging engaging and produced lively discussions. Looking at technologies. This will help improve screening of the agenda for today and tomorrow, I am confident transactions and detection of suspicious activities that the deliberations on contemporary topics such thereby reducing false positives and false negatives. as evolving AML-CFT landscape, financial inclusion Considering the evolving landscape in the area 4 Alliance of Reporting Entities in India for AML/CFT (ARIFAC) is a of money laundering resulting from changing private-private partnership initiative amongst reporting entities in India belonging to multiple sectors to facilitate information sharing, customer behaviour and evolving products and development of knowledge products, training programmes and certifications. services, we need to continuously augment AML risk 124 RBI Bulletin April 2025Private Sector Collaborative Forum of the Financial Action Task Force (FATF), SPEECH March 26, 2025, Mumbai assessment framework and make appropriate system making it easier and seamless not only for customers enhancements on a regular basis after assessing the but also for regulated entities to perform customer impact of ML and other risks. The focus has to also be identification and due diligence. I am told there is a on understanding the latest trends and developments separate session to deliberate on the state of play of in the financial world that can be exploited by technical solutions in customer due diligence area. criminals and accordingly develop tools and enabling The discussions could be helpful in further enhancing frameworks that will allow us to detect suspicious the capability and utility of CKYCR manifold. transactions and activities early and take pre-emptive Further, during the process of CDD, reporting action. With the adoption of new technological tools entities collect a large amount of data from the and models, I am sure that AML-CFT risk assessments customers. Moreover, there are requirements of can be further fine-tuned. I would urge you all to sharing of information with Financial Intelligence discuss and share best practices in identification, Units, law enforcement agencies and data registries mitigation and supervision of AML-CFT risks. This leading to concerns regarding data protection and will not only help to reduce compliance burden on the sharing of information without consent. India has Regulated Entities but also result in optimal allocation recently enacted a law for Digital Personal Data of supervisory resources. Protection. Exchange of experiences from different While India has made remarkable progress jurisdictions will help us in better implementing the in financial inclusion, we need to ensure that we law in our country. continue to widen and deepen it. The discussions on FATF standards to promote financial inclusion Another important area which needs discussion need to find answers to the challenge of aligning is the travel rule. In today’s world, fast payment financial inclusion and financial integrity, especially systems are revolutionizing financial access and for the developing economies. It must be ensured deepening financial inclusion. Developing countries that regulations do not create unintended barriers like India have made huge progress in making digital to financial inclusion. We need to be mindful of payments accessible, affordable, and convenient. customer rights and convenience while fulfilling While card networks have helped developed the due diligence requirements. I am happy to note economies in improving payment systems, fast that the amendments to Recommendation 1 and payment systems have assisted Emerging Market and its interpretive note under the Mexican presidency Developing Economies (EMDEs) leapfrog in this area. intend to foster and promote financial inclusion We have also enabled cross border payments using without compromising on financial integrity. Similar fast payment systems with a few countries. We will approach is needed to extend access of financial continue to work towards fulfilling our commitment channels for supporting humanitarian aid. to the effective implementation of the next phase of G20 roadmap towards inclusive cross-border payments In recent years, digitalisation has been increasingly applied to customer onboarding and customer due by 2027. In this context, the ongoing discussions on diligence (CDD) processes. India has made huge FATF Recommendation 16 (R.16), known as the travel strides in this regard too. The digital KYC and video rule, assume importance. To meet the G20 objective of KYC are shining examples of this. The Central KYC making cross-border payments faster, cheaper, more Records Registry (CKYCR) with more than one billion transparent and more inclusive, while maintaining records is another example, which has the potential their safety and security, it would be desirable to of ushering in a new era of customer onboarding by make the travel rule technology-neutral. RBI Bulletin April 2025 125SPEECH Private Sector Collaborative Forum of the Financial Action Task Force (FATF), March 26, 2025, Mumbai Lastly, discussions regarding combating that underpins the global financial framework. proliferation financing and sanctions evasion need Together, let us continue to collaborate and innovate to answer questions related to identification of in building a financial ecosystem that is not only safe and secure but also fast, convenient, accessible products and services which are most vulnerable to and affordable. Let us build financial systems that exploitation and the mitigation of the risks related not only thwart the attempts of money laundering, to such products. This forum can discuss the best terror financing and proliferation financing, but also practices as well as challenges in this regard. support financial inclusion, encourage innovation, Conclusion and facilitate economic growth. In the end, I wish the forum very fruitful and productive deliberations. To conclude, I would like to stress that through our collaborative efforts, we can safeguard the trust Thank you. 126 RBI Bulletin April 2025Shared Vision, Shared Responsibility – Strenghtening NBFCs SPEECH Shared Vision, Shared credit delivery models that harness technology and local insights, NBFCs have been able to design Responsibility – Strenghtening customised financial products tailored to diverse NBFCs* borrower needs. Their agility and close connect with customers have enabled them to play a role that is Shri Swaminathan J not only complementary to the role traditionally played by banks but, in many instances, catalytic in CA Shri Charanjot Singh Nanda, President, building a financial ecosystem characterised by deeper Institute of Chartered Accountants of India; intermediation and wider opportunity. Chairpersons of the Audit Committee of the Boards, The importance of NBFCs has only grown with MDs & CEOs of NBFCs, and Statutory Auditors time. In fact, over the past decade, their growth has of NBFCs, Executive Directors from RBI and my consistently outpaced that of banks — a trend that colleagues from the Reserve Bank of India, Ladies and has become even more pronounced in the last few Gentlemen. A very good morning to all of you. years. This rapid growth is a testament to the sector’s It is an honour to address this esteemed gathering relevance and resilience — but it also raises the stakes. representing the key pillars of the NBFC ecosystem — As NBFCs become more systemically important, the CEOs entrusted with driving business responsibly, standards of governance, risk management, and Chairpersons of Audit Committees overseeing customer treatment must rise accordingly. assurance, Statutory Auditors who ensure transparency Understanding the Risks- Need for Responsible and integrity, along with regulators and supervisors Innovation committed to maintaining financial stability and fostering a sound regulatory environment. The theme The business model of NBFCs — while effective of our engagement today — “Shared Vision, Shared — comes with its own set of structural risks. Their Responsibility – Strengthening the NBFCs” — could funding is short-term as compared to the maturity not be more timely or relevant. of their lending or is directed towards higher-risk customer segments. The evolution of the NBFC sector is indeed a story of entrepreneurial energy, innovation and This maturity and credit transformation is at the social impact. However, as the sector grows in scale heart of the NBFC model — but it also demands a and systemic importance, so too must our efforts to heightened focus on risk management. If not carefully reinforce its foundations. A resilient, customer-centric, managed, it can create vulnerabilities, especially and well-governed NBFC sector is a shared aspiration during periods of market stress or liquidity shocks. — and delivering on it our shared responsibility. Risk-taking must be intelligent and well planned, NBFCs have emerged as powerful engines of and never beyond the risk absorption capacity of the credit. By complementing the traditional banking entity concerned. Liquidity and credit risks must system, they have significantly expanded access to be rigorously assessed and managed. Asset-liability credit, particularly for segments that have historically mismatches, nature and tenor of the funding sources, been underserved or excluded. Through innovative and concentration risks all need board-level oversight which should be ably supported by robust internal * Speech by Shri Swaminathan J, Deputy Governor at the Conference of Non-Banking Financial Companies held at Chennai on March 28, 2025. controls. RBI Bulletin April 2025 127SPEECH Shared Vision, Shared Responsibility – Strenghtening NBFCs Growth with Fairness: Customer-Centricity is Non- a critical role in reinforcing governance, guiding Negotiable management on assurance, and ensuring the integrity of internal control systems. When functioning Most importantly, even as we pursue scale, speed, effectively, it becomes a proactive forum for identifying and profits, we must not lose sight of fairness to the vulnerabilities and initiating timely corrective actions. customer — that is the cornerstone of a sustainable business model. The NBFC sector must live up to The role of the Audit Committee Chairperson is its promise of inclusion by treating customers with particularly significant in setting the tone for effective dignity, transparency, and care. This entails ensuring governance. It is essential that committee meetings transparent and easy-to-understand pricing, free from are held regularly, conducted with clear purpose, and hidden charges or usurious interest rates. In instances thoroughly documented to ensure accountability and of default, recovery practices must be conducted in an follow-through. empathetic and respectful manner. The effectiveness of the Committee is in the Unfortunately, some NBFCs think they can substance of its deliberations. The ACB must actively pursue a business model where it is par for the course monitor the adequacy and functioning of internal to resort to weak underwriting in pursuit of quick control systems — not merely to confirm their growth, coupled with excessive and unsustainable presence, but to ensure they are operating effectively interest rates — at times masked as upfront in practice. Similarly, audit observations should not charges or processing fees — which is followed by remain confined to meeting minutes; they must aggressive recovery practices upon default. Let me translate into timely and meaningful corrective state unequivocally: this is not an acceptable model. actions. A strong ACB also tracks audit findings and Financial inclusion cannot be used as a pretext ensures that corrective measures are implemented for financial exploitation. I urge each one of you to without delay. commit your institutions to upholding fairness in all Equally important is the establishment of an your dealings. effective whistleblower mechanism overseen by the This responsibility for fair conduct is shared Board or the ACB which empowers employees and commitment by the CEO, the Board, and assurance grants them anonymity, to report unethical or non- functions in any entity. A customer-centric culture compliant behaviour, without fear of reprisal. must be driven from the top and embedded at all CEOs too have a crucial role in upholding the levels. integrity of financial reporting. They must actively How do we ensure that our shared vision is realised, deter any attempts—whether deliberate or cleverly and our collective responsibilities are fulfilled? One disguised—to misapply accounting standards or of the most effective ways is by strengthening both regulatory provisions. It is equally important to foster internal and external assurance mechanisms. an environment where the Chief Financial Officer and Head of Internal Audit feel empowered to engage in Strengthening Oversight: the Role of Audit open, honest, and transparent dialogue with the Audit Committee Committee of the Board. Let me begin with the Audit Committee of the The Crucial Role of Statutory Auditors Board (ACB). Far from being a routine compliance requirement, the ACB is the lynchpin of institutional Now let me come to the role of Statutory Auditors, oversight and long-term financial health. It plays who are an indispensable part of the assurance 128 RBI Bulletin April 2025Shared Vision, Shared Responsibility – Strenghtening NBFCs SPEECH ecosystem. In fact, the role of auditors has never been — gradually moving toward greater harmonisation more critical — not merely in checking compliance, with banks where warranted, while still preserving but in upholding trust. And trust, once lost, is hard to operational flexibility suited to the unique role NBFCs rebuild. play in the financial system. The introduction of the scale-based regulatory framework explicitly recognises Auditors are expected to provide an independent, that the intensity of regulation and supervision must professional opinion on whether the financial be proportionate to systemic importance. At the same statements present a true and fair view of the NBFC’s time, the regulatory architecture encourages the financial position and comply with regulatory and development of responsible innovation and healthy accounting standards. However, in today’s complex competition in the sector. and dynamic environment, this is no longer enough. Similarly, the role of the supervisor has also Recent incidents — both in India and abroad — become more interactive and forward-looking. It is not have shown that traditional financial audits must just about identifying compliance breaches after the evolve. Auditors must bring technical expertise, fact, but about engaging with entities to strengthen forensic insight, and an ethical lens to their work. internal systems, enhance governance, and build Red flags must not be ignored. Complex structures, resilience against emerging risks. Through onsite derivatives, off-balance sheet items, related party inspections, offsite surveillance, thematic reviews, transactions, and provisioning policies must be closely and structured engagements, the supervisory process examined. aims to be a partner in the financial sector’s long-term Facilitative Role of Regulators and Supervisors soundness — not an impediment to its progress. As regulators and supervisors, we shoulder a Conclusion dual responsibility — to safeguard stability and Our shared vision is clear: a dynamic, inclusive, discipline, while also fostering an environment that and trusted NBFC sector that complements the encourages innovation, inclusion, and sustainable banking system and serves the evolving needs of the growth. Contrary to perception in certain quarters, Indian economy. And the way to achieve it is through our approach actively seeks to strike the right balance. shared responsibility — in governance, in customer At the Reserve Bank of India, we are acutely aware protection, in financial prudence, and in ethical that regulation is not merely about control; it is about conduct. enabling responsible financial intermediation within a well-defined and transparent framework. Several We in the regulatory community stand committed initiatives in recent years reflect this facilitative and to supporting this journey. Our intent is not to stifle proportionate approach to regulation. In my previous innovation but to ensure that growth is sustainable, role as a commercial banker, I had the fortuitous risks are well-managed, and customer trust is never opportunity to be closely associated with one such compromised. On behalf of the RBI, I can assure you initiative -the Regulations Review Authority 2.0 – which that as regulators and supervisors we will remain reinforced the RBI’s strong commitment to easing committed to playing our part, not just as watchdogs, the regulatory burden and streamlining compliance but as enablers of a robust, inclusive, and future-ready without compromising regulatory objectives. financial ecosystem. The regulatory framework for NBFCs has This conference gives us an opportunity to reflect evolved in the recent years with this understanding on how we can contribute to this shared agenda. RBI Bulletin April 2025 129SPEECH Shared Vision, Shared Responsibility – Strenghtening NBFCs Whether making strategic decisions, chairing audit of shared responsibility amongst all of us, in our committees, or signing off on financials, drafting pursuit to achieve an inclusive growth for all and regulations or conducting supervision — we are realise the vision of Viksit Bharat 2047. shaping the sector’s future. With this I wish you all fruitful and enriching Therefore, let us work together — with clarity deliberations over the course of this conference of purpose and unity of action — to build a stronger, and look forward to the ideas and insights that will fairer, and more resilient NBFC ecosystem. Wealth emerge in pursuit of our shared vision. Thank you creation should not just be for personal or institutional for this opportunity and wish you all good luck, gain but to support the community, reflecting a sense Jai Hind! 130 RBI Bulletin April 2025ARTICLES State of the Economy Three Years of the Standing Deposit Facility: Some Insights Changing Dynamics of Climate Policy Uncertainty and Energy Commodity Prices Rural Consumer Confidence in India: Bridging the GapState of the Economy ARTICLE State of the Economy* sluggish growth”1. The Organization for Economic Co-operation and Development (OECD), in its latest global economic outlook, has assessed that increasing Escalation of trade and tariff tensions and the trade restrictions will contribute to higher costs both resultant financial market volatility have raised concerns for production and consumption.2 regarding the weakening of global growth in the near- term. Although the dampening global economic outlook The baseline assessment is that global growth could impact India’s economic growth through weaker is likely to weaken while potential pass-through external demand, the domestic growth engines, viz., of tariffs to consumer prices could keep inflation consumption and investment, are relatively less susceptible elevated. It is estimated that a trade war triggered to external headwinds. Prospects for the farm sector have by the increase in import tariffs is likely to weaken been boosted by the forecast of an above normal southwest global output by 0.5 per cent.3 Forecasters have also monsoon for 2025, which could augment farm incomes increased the likelihood of a recession in the US.4 and keep food prices under check. Headline inflation While the immediate effects are already visible moderated to a 67-month low of 3.3 per cent in March, in market volatility and economic forecasts, the longer-term consequences could lead to widespread mainly due to a moderation in food prices. disruption in industries, reduced investment, Introduction and slower economic recovery worldwide. Falling The global economic landscape is rapidly evolving, commodity prices, however, could soften the blow on with trade policy uncertainty emerging as the key countries which are net importers. Oil prices dropped driver of the near-term outlook. On April 2, 2025, the to a 4-year low and metals prices have plummeted US announced a 10 per cent base tariff and reciprocal tracking anticipated slowdown in global growth. levies on approximately 60 countries, taking average As per the World Trade Organization’s (WTO’s) US tariffs to their highest levels in over a century. assessment, the immediate impact of tariffs on A 90 day pause on implementation of tariffs was world trade is expected to be substantial as, global announced on April 9 for those countries which did merchandise trade volumes could contract by around not resort to retaliatory actions. These developments 1 per cent in 2025, owing to new tariffs announced by have stoked fears of a global trade war, and countries the US along with those introduced at the beginning of are still working out their appropriate response in the year.5 Much of this decline is expected to be driven this uncertain environment. The deleterious impact by an 80 per cent fall in the bilateral trade between of these escalating trade tensions on global growth the US and China. As per the Food and Agriculture are, however, inevitable. As per the International Organization’s (FAO) estimate, world trade in cereals Monetary Fund (IMF), these tariffs “represent a in 2024-25 is projected to decline by 6.7 per cent from significant risk to the global outlook at a time of the previous year’s level, reaching the lowest since * This article has been prepared by Rekha Misra, G. V. Nadhanael, Arpita 1 Statement by IMF Managing Director Kristalina Georgieva, April 3, 2025. Agarwal, Biswajeet Mohanty, Durga G, Garima Wahi, Ramesh Kumar Gupta, 2 OECD, Global Economic Outlook, Press Release, March 17, 2025. Harendra Behera, Jessica Maria Anthony, Akash Raj, Rachit Solanki, Sakshi 3 https://www.bofbulletin.fi/en/2025/1/how-will-the-trade-war-hit-the- Chauhan, Radhika Singh, Satyendra Kumar, Agamani Saha, Manu Swarnkar, economy/ Subhradip Paul, D. Suganthi, Pratibha Kedia, Avnish Kumar, Apeksha 4 Goldman Sachs, April 7, 2025. Sharma, Rajas Saroy, Yuvraj Kashyap, Satyam Kumar, Nikhil Prakash Kose and Akshara Awasthi. Views expressed in this article are those of the 5 Statement from Dr. Ngozi Okonjo-Iweala, Director-General of the WTO, authors and do not represent the views of the Reserve Bank of India. April 3, 2025. RBI Bulletin April 2025 131ARTICLE State of the Economy 2019-20, engendering inflation concerns in cereal anticipated slowdown in growth present them with importing countries.6 the trade-off of supporting growth without fuelling inflation. The longer-term implications of these Global financial markets are in a state of flux, developments on productivity, market competition scrambling to decipher the implications of the and welfare also cannot be ignored. dynamically evolving trade policy scenario. The sweeping tariff announcements sent financial Amidst a myriad of challenges posed by this markets into a tailspin globally. In the US, the S&P volatile external environment, the Indian economy 500 index plunged to its lowest level in 11 months, has exhibited marked resilience, with growth poised erasing over US$5 trillion in market value within to recover from the blip witnessed during H1:2024- two days following the announcement of tariffs, but 25. Although the weakening of global economic rebounded sharply on April 9 when a 90 day pause on outlook could impact overall growth through weaker implementation was announced. The US junk bond external demand, India’s domestic growth engines, market saw its largest sell-off since 2020, even as the viz., consumption and investment, are relatively less US dollar fell about 1.8 per cent. Global bond yields susceptible to external headwinds. As discussed in fell during March 2025 as investors, driven by flight to more detail in Section IV, India also has a low external safety, moved to risk free government bonds amidst vulnerability as reflected in its modest external fears that escalating trade tensions could trigger a debt-GDP ratio of 19 per cent and substantial forex tariff-induced recession. The US bond yields, after reserves (close to 11 months of imports cover). reaching a high in mid-January 2025 fell as investor India’s position as the fastest growing major sentiments turned negative amidst continued sell-off economy, coupled with macroeconomic stability, in US equity markets. However, in early April, the 10- makes it a preferable investment destination in a year US treasury yields moved higher, even raising world characterised by growth slowdown and macro concerns over reputation of US treasuries as a safe vulnerabilities.8 Additionally, a stable financial sector haven.7 Meanwhile, in Europe, the announcement of provides the backbone for sustainable growth, as the massive allocation of expenditure towards defence Indian financial system has become more robust and and infrastructure spending in some countries such diverse, including banks and NBFCs being resilient to as Germany and Portugal have led to the rise of the macrofinancial shocks.9 10-year bond yields as investors priced in larger The Reserve Bank has been proactively deploying borrowings. The yield on 10-year Japanese bonds a slew of measures, including open market operations rose during March after years of being around zero (OMOs), daily variable rate repo (VRR) auctions, and as investors prepared for tighter monetary policy. dollar/rupee buy-sell swap auctions, to augment Policy makers across the globe are grappling system liquidity. These measures, undertaken since with a number of challenges stemming from these mid-January 2025, have helped to maintain orderly developments. Potential higher trade costs and conditions in the money market with softening rates 6 FAO Cereal Supply and Demand Brief, April 4, 2025. 8 During 2024-25, India fetched strong gross FDI inflows despite the moderation in net FDI inflows due to higher repatriation. 7 https://www.nbcnewyork.com/news/business/money-report/2-year- 9 India: Financial Sector Assessment Program-Financial System Stability treasury-drops-to-lowest-level-in-years-as-investors-digest-impacts-of-tariff Assessment, International Monetary Fund, February 28, 2025. s/6214561/?os=rebeccakelsey.comdfblog&ref=app 132 RBI Bulletin April 2025State of the Economy ARTICLE and spreads amidst improving liquidity conditions. In its latest bi-monthly monetary policy meeting The spread of 3-month Certificates of Deposit and held during April 7-9, 2025, the Monetary Policy 3-month Commercial Paper over 91-day Treasury bills Committee (MPC) of the Reserve Bank recognised has also reduced, reflecting improvement in liquidity that the global economy is going through a period of conditions. The funding to NBFCs is also expected to exceptional uncertainties making it difficult to extract improve as low risk weights on bank loans to NBFCs signal from a noisy and uncertain environment. The have been restored from April 1, 2025. MPC noted that inflation is currently below the target and the domestic inflation outlook provides On the real economy, Indian entrepreneurs confidence of a durable alignment of headline are more confident than their global counterparts inflation with the target of 4 per cent over the about their business prospects.10 India’s Purchasing next year. The MPC opined that a benign inflation Managers Indices (PMIs) have consistently outlook and slackening pace of growth makes it outperformed that of other countries in line with imperative for monetary policy to remain growth this optimistic outlook. The latest enterprise surveys supportive. Accordingly, the MPC reduced the policy conducted by the Reserve Bank corroborate this repo rate by 25 bps to 6.00 per cent and reinforced assessment (Annex 1). There is continued positivity the easing impact through a change in the stance to across sectors, with manufacturing showing accommodative from neutral. higher capacity utilisation and improved business sentiments. Services and infrastructure firms remain Set against this backdrop, the remainder of the upbeat on demand, pricing and profitability. Going article is structured into four sections. Section II forward, sustained demand from rural areas, an covers the rapidly evolving developments in the anticipated revival in urban consumption, expected global economy. An assessment of domestic recovery of fixed capital formation supported by macroeconomic conditions is set out in Section increased government capital expenditure, and III. Section IV encapsulates financial conditions in healthy balance sheets of corporates and banks are India, while the last Section presents the concluding expected to support growth. observations. Headline CPI inflation declined to a 67-month II. Global Setting low of 3.3 per cent in March 2025, mainly due to the Growing policy uncertainty and tariff war continued moderation in food prices. Core inflation escalation are weighing on global economic prospects (CPI excluding food and fuel), however, remained amidst fears that the combined effect of tariffs and steady at 4.1 per cent, with gold contributing 22.8 per expected retaliations will intensify headwinds for cent. Recent decline in global commodity prices on global growth. Against this backdrop, estimates of account of an expected slowdown in global growth has global GDP growth, inflation and trade are likely to be eased some of the pressures from imported inflation. revised downwards. Our model-based nowcasts also Prospects for the farm sector have been boosted by point to a significant deceleration in global growth the forecast of an above normal southwest monsoon momentum in Q1:2025 (Chart II.1). for 2025, which could augment farm incomes and While policy uncertainty has intensified, supply keep food prices under check. side pressures to the global economy are showing 10 EY-Parthenon CEO Outlook Survey: Global Confidence Index 2025. signs of easing. The Global Supply Chain Pressure RBI Bulletin April 2025 133ARTICLE State of the Economy Chart II.1: Global GDP Growth Nowcast (Q-o-Q) Sources: CEIC; OECD; and RBI staff estimates. Index (GSCPI) declined below historical average levels costs and reduced delivery times (Chart II.2a). The in March 2025 on account of lower transportation geopolitical risk indicator also recorded a sequential 134 RBI Bulletin April 2025 tnec reP 2.5 2.0 1.3 1.5 1.0 0.5 0.4 0.7 0.0 -0.5 47 Countries OECD+ actual 87 Countries CEIC Nowcast 87 Countries CEIC Actual 1202-3Q 1202-4Q 2202-1Q 2202-2Q 2202-3Q 2202-4Q 3202-1Q 3202-2Q 3202-3Q 3202-4Q 4202-1Q 4202-2Q 4202-3Q 4202-4Q 5202-1Q Chart II.2: Trends in Global Supply Chain Pressures and Geopolitical Risks a. Global Supply Chain Pressure Index (GSCPI) b. Geopolitical Risk Indicator c. Baltic Dry Index d. Drewry World Container Index Notes: 1. GSCPI reflects data on transportation costs and manufacturing indicators. 2. The Baltic Dry Index provides a benchmark for the price of moving the major raw materials by sea and consists of three sub-indices that measure different sizes of dry bulk carriers. 3. Drewry's weekly WCI assessment reports actual spot container freight rates for major east-west trade routes. The composite index represents a weighted average of the eight shipping routes by volume and is reported in USD per 40-foot container. Sources: Federal Reserve Bank of New York; BlackRock Investment Institute, March 2025; and Bloomberg. morf snoitaived dradnatS xednI eulav egareva xednI reniatnoc teef 04 rep $ SU 0.5 0.0 -0.2 -0.5 -1.0 -1.5 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 0.9 0.7 0.8 0.5 0.3 0.1 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 4000 3500 3000 2500 2000 1500 1000 1274 500 0 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 7000 6000 5000 4000 3000 2265 2000 1000 0 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpAState of the Economy ARTICLE moderation in March although the level remains Eurozone also witnessed weakening sentiments, elevated (Chart II.2b). The Baltic Dry Index (BDI) while it improved marginally in the UK and Brazil eased slightly after a strong rebound in February, (Chart II.3a and b). Financial conditions exhibited suggesting a temporary cooling in dry bulk shipping tightening bias across major AEs and EMEs, except in demand (Chart II.2c). Container freight rates, which India and China (Chart II.3c and d). had been on a declining trend, however, saw a brief The global composite purchasing managers’ uptick by early April driven by factors such as tariff- index (PMI) increased modestly in March 2025 as related disruptions and reduced shipping capacity the downturn in the manufacturing sector was (Chart II.2d). offset by a sharp uptick in services sector activity Trade and policy uncertainties have started to (Chart II.4a). Global manufacturing PMI moderated impact consumer sentiments across geographies. as output and new orders decelerated, and business Consumer sentiments worsened in the US in March optimism fell to a three-month low. Global services 2025, reaching their lowest level since November PMI, however, rose sharply, recovering from 2022, on account of surging inflation expectations, February’s low. Across regions, India continued to be worsening business conditions and uncertain an outlier with robust PMI readings compared with economic outlook on account of tariff escalations. its peers (Chart II.4b). Chart II.3: Consumer Sentiment and Financial Conditions a. Consumer Sentiments (AEs) b. Consumer Sentiments (EMEs) c. Financial Conditions Index (AEs) d. Financial Conditions Index (EMEs) Notes: 1. Japan: A score above 50 indicates consumer optimism, below 50 shows a lack of consumer confidence, and 50 indicates neutrality. 2. Eurozone and UK: -100 indicates extreme lack of confidence, 0 denotes neutrality, and 100 indicates extreme confidence. 3. India and the US: The higher the index value, the higher the consumer confidence. 4. For the financial condition index (pertaining to EMEs constructed by Goldman Sachs), a reading below 100 is accommodative and vice versa. As for the AEs, the index constructed by Bloomberg is a z-score where a positive value indicates accommodative/easy financial conditions and vice versa. Source: Bloomberg. RBI Bulletin April 2025 135 xednI US Japan Eurozone (RHS) UK (RHS) xednI xednI Brazil China India xednI US UK Eurozone xednI 100 0 90 -5 -14.5 -10 80 -15 70 -19 -20 60 -25 50 57 -30 -35 40 -40 30 34.1 -45 20 -50 China India Brazil 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 100 98 96 95.5 94 92 90 88.4 88 86 84.3 84 82 80 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 2 1.36 1 0.91 0.23 0 -1 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 106 104 103.4 102 101.6 100 98 96 96.2 94 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raMARTICLE State of the Economy Chart II.4: Purchasing Managers’ Index (PMI) a. Global PMI b. PMI (Regional Comparisons) Note: A level of 50 corresponds to no change in activity, and a reading above 50 denotes expansion and vice versa. Source: S&P Global. The composite PMI for new export orders uncertainty (TPU) index reaching historical highs recorded a sequential pick-up in March, with both (Chart II.6). the manufacturing and composite new export Global commodity prices, as indicated by the orders moving to expansionary territory, after Bloomberg Commodity Index, rose by 3.6 per cent remaining in contractionary zone since June 2024. in March, led by metal prices, which rose on account Services export orders continued to expand despite of rising optimism about China’s stimulus package. a sequential deceleration (Chart II.5). Global trade outlook, however, is marred by considerable Commodity prices, however, fell sharply in early uncertainty as reflected in the trade policy April due to bleak demand outlook in anticipation of a 136 RBI Bulletin April 2025 xednI xednI 54 52.7 52 52.1 50.3 50 48 Composite Manufacturing Services Mar-25 Feb-25 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 60 55 50 45 40 aidnI lizarB eropagniS niapS SU EAU labolG gnoK gnoH anihC KU ylatI aissuR adanaC ailartsuA enoZ oruE napaJ ynamreG ecnarF Chart II.5: Global PMI: New Export Orders Note: A level of 50 corresponds to no change in activity, and a reading above 50 denotes expansion and vice versa. Source: S&P Global. xednI 52 51 50.1 50 50.1 50.1 49 48 47 Composite Manufacturing Services 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raMState of the Economy ARTICLE global slowdown in the wake of a disruptive tariff war, Food prices, measured by the FAO’s food price index, though recovered partially thereafter (Chart II.7a). edged up by 0.3 per cent (m-o-m) in March, primarily Chart II.7: Commodity and Food Prices a. Bloomberg Commodity Index b. Food Prices c. Brent Crude Oil d. Metals Sources: Bloomberg; World Bank Pink Sheet; and FAO. RBI Bulletin April 2025 137 xednI )001=61 - 4102( xednI Food price index Meat Dairy Cereals Vegetable oil Sugar lbb /$SU Futures as on Mar 14, 2025 Price Futures as on Apr 14, 2025 )001=2202 - dne( xednI 108 103 101.0 98 93 Gold Copper Iron 32-luJ-30 32-guA-30 32-peS-30 32-tcO-40 32-voN-40 32-ceD-50 42-naJ-50 42-beF-50 42-raM-70 42-rpA-70 42-yaM-80 42-nuJ-80 42-luJ-90 42-guA-90 42-peS-90 42-tcO-01 42-voN-01 42-ceD-11 52-naJ-11 52-beF-11 52-raM-41 52-rpA-41 161.8 160 148.7 140 127.1 120 118.0 116.9 109.7 100 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 95 90 85 80 75 70 69.10 65 68.31 63.70 60 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 52-yaM 52-luJ 177.71 170 150 130 109.47 110 90 84.11 70 32-luJ-30 32-guA-30 32-peS-30 32-tcO-40 32-voN-40 32-ceD-50 42-naJ-50 42-beF-50 42-raM-70 42-rpA-70 42-yaM-80 42-nuJ-80 42-luJ-90 42-guA-90 42-peS-90 42-tcO-01 42-voN-01 42-ceD-11 52-naJ-11 52-beF-11 52-raM-41 52-rpA-41 Chart II.6: Trade Policy Uncertainty (TPU) Index Note: The TPU index is based on automated text searches of the electronic archives of seven newspapers: Boston Globe, Chicago Tribune, Guardian, Los Angeles Times, New York Times, Wall Street Journal, and Washington Post. The measure is calculated by counting the monthly frequency of articles discussing trade policy uncertainty (as a share of the total number of news articles) for each newspaper. Source: https://www.matteoiacoviello.com/tpu.htm xednI 700 600 500 400 300 200 100 0 01-peS 11-raM 11-peS 21-raM 21-peS 31-raM 31-peS 41-raM 41-peS 51-raM 51-peS 61-raM 61-peS 71-raM 71-peS 81-raM 81-peS 91-raM 91-peS 02-raM 02-peS 12-raM 12-peS 22-raM 22-peS 32-raM 32-peS 42-raM 42-peS 52-raMARTICLE State of the Economy driven by the increase in prices of vegetable oil, in March, bolstered by safe-haven demand amidst which was somewhat offset by moderation in prices heightened trade uncertainties. Although the yellow of cereals and sugar (Chart II.7b). Crude oil prices metal pared gains in early April amidst escalating increased by 5.1 per cent in March (m-o-m) after the trade tensions, prices picked up again to surpass the US imposed fresh sanctions on Venezuela and Iran. $3200 mark (Chart II.7d). Prices, however, declined precipitously in April, with Headline inflation continued to remain moderate the brent prices falling to around US$ 63 per barrel in most major economies, although spillover of tariffs on April 9 - touching nearly a four-year low - amidst to final consumer prices has emerged as a major fears of growth disruptive tariff wars (Chart II.7c). upside risk. In the US, CPI inflation softened to 2.4 Apart from this, unexpected announcement by the per cent (y-o-y) in March from 2.8 per cent in February. OPEC plus to advance their plan to phase out the Inflation in terms of the personal consumption oil output cuts, thereby increasing output starting expenditure (PCE) deflator, however, remained stable May, also contributed to the price decline. Brent oil prices recovered to US$ 67 per barrel as on April 14, at 2.5 per cent in February. Headline inflation in the following tariff exemptions on electronic goods. Base Euro area moderated to 2.2 per cent in March from metal prices also fell sharply in early April on account 2.3 per cent in February. Inflation in the UK and Japan of an expected slowdown in global demand, followed also softened by 20 bps and 30 bps to 2.8 per cent and by a modest recovery. Gold prices remained elevated 3.7 per cent, respectively, in February (Chart II.8a). Chart II.8: Inflation - AEs and EMEs a. Headline - AEs b. Headline - EMEs US (PCE) UK Euro area Japan c. Core d. Services Sources: Bloomberg; and OECD. 138 RBI Bulletin April 2025 tnec reP Brazil Russia China South Africa India US UK Euro Area Japan tnec reP tnec reP tnec reP 10 10.3 9 8 7 6 5 5.5 4 3.3 3 3.2 2 1 0 -0.1 -1 US UK Euro Area Japan 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 10 9 8 7 6 5 4 3.7 3 2.8 2.5 2 2.2 1 0 -1 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 8 7 6 5 4.7 4 3.7 3 3.4 2 1.3 1 0 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 7 6 5 4 3.4 3 2.8 2 2.4 1 1.5 0 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raMState of the Economy ARTICLE Among EMEs, CPI inflation in Brazil and Russia rose based declines with the equity index shedding 10.2 in March, while that in South Africa remained stable. per cent up to April 8 (Chart II.9a). Equity markets in China, on the other hand, remained in deflation, most geographies staged a rapid recovery following the with CPI registering a decline of 0.1 per cent (y-o-y) announcement of the pause in tariff implementation in March (Chart II.8b). Core inflation remained above although volatility remains high. Yields on the US the headline across major AEs, except in Japan, while government securities remained volatile in March services inflation decelerated in the US and Euro area amidst a turbulent global environment which (Chart II.8c and d). impacted the sentiments. The US 10-year treasury The risk-off sentiment amidst trade policy yields dropped below the 4 per cent mark on April 6 uncertainty contributed to a significant downturn after fears of trade war intensified, inducing investors in the equity market in March and early April. The to deploy funds in safer assets (Chart II.9b). The Morgan Stanley Capital International (MSCI) world yields recovered quickly in the following week, as equity index shed gains to the tune of 4.1 per cent safe haven appeal for gold and Swiss franc increased. (m-o-m) in March, led by the losses in AE equity The US dollar index (DXY) depreciated by 3.2 per cent markets. The sell-off in equity markets intensified in March and further by 4.4 per cent in April (up to after the tariff announcements, leading to broad- April 14) as investors priced in a higher probability Chart II.9: Global Financial Markets a. Equity Indices (MSCI) b. US Government Bond Yields c. Currency Indices d. Portfolio Flows to EMEs Sources: Bloomberg; and IIF. RBI Bulletin April 2025 139 )001=1202 - dne enuJ( xednI World AEs EMEs tnec reP 10-year 2-year Spread (10yr-2yr) xednI xednI MSCI EME currency index Dollar index (RHS) noillib $SU 130 116.5 120 110 111.2 100 90 80 70 77.1 60 Debt Equity Total 32-luJ-30 32-guA-30 32-peS-30 32-tcO-40 32-voN-40 32-ceD-50 42-naJ-50 42-beF-50 42-raM-70 42-rpA-70 42-yaM-80 42-nuJ-80 42-luJ-90 42-guA-90 42-peS-90 42-tcO-01 42-voN-01 42-ceD-11 52-naJ-11 52-beF-11 52-raM-41 52-rpA-41 5.5 5.0 4.37 4.5 4.0 3.5 3.85 3.0 2.5 2.0 1.5 1.0 0.53 0.5 0.0 -0.5 -1.0 -1.5 32-luJ-30 32-guA-30 32-peS-30 32-tcO-40 32-voN-40 32-ceD-50 42-naJ-50 42-beF-50 42-raM-70 42-rpA-70 42-yaM-80 42-nuJ-80 42-luJ-90 42-guA-90 42-peS-90 42-tcO-01 42-voN-01 42-ceD-11 52-naJ-11 52-beF-11 52-raM-41 52-rpA-41 110 1,790 1,770 108 1766.0 1,750 106 1,730 104 1,710 102 1,690 1,670 99.6 100 1,650 98 32-luJ-30 32-guA-30 32-peS-30 32-tcO-40 32-voN-40 32-ceD-50 42-naJ-50 42-beF-50 42-raM-70 42-rpA-70 42-yaM-80 42-nuJ-80 42-luJ-90 42-guA-90 42-peS-90 42-tcO-01 42-voN-01 42-ceD-11 52-naJ-11 52-beF-11 52-raM-41 52-rpA-41 15 10 5 -1.7 -1 -6 -11 -2.2 -3.9 -16 32-luJ-1 32-luJ-72 32-guA-22 32-peS-71 32-tcO-31 32-voN-8 32-ceD-4 32-ceD-03 42-naJ-52 42-beF-02 42-raM-71 42-rpA-21 42-yaM-8 42-nuJ-3 42-nuJ-92 42-luJ-52 42-guA-02 42-peS-51 42-tcO-11 42-voN-6 42-ceD-2 42-ceD-82 52-naJ-32 52-beF-81 52-raM-61 52-rpA-11ARTICLE State of the Economy Chart II.10: Changes in Policy Rates a. AEs b. EMEs Q1:2024 Q2:2024 Q3:2024 Q1:2024 Q2:2024 Q3:2024 Q4:2024 Q1:2025 Q2:2025(till16April,2025) Q4:2024 Q1:2025 Q2:2025 (till 16 April, 2025) Source: Bloomberg. of a recession in the US. The MSCI currency index III. Domestic Developments for EMEs increased modestly in March and remained The Indian economy continues to remain resilient broadly steady in April (up to April 14) despite on strong domestic growth impulses and sound capital outflows, in both debt and equity, mounting macro-fundamentals despite strong global headwinds downside pressures (Chart II.9c and II.9d). emanating from trade tensions. Consumers and In terms of monetary policy actions, most countries businesses remain optimistic regarding the economic outlook. As per the latest Consumer Confidence remained guarded maintaining a pause, while a few Survey of the Reserve Bank, the Current Situation reduced rates albeit with caution. Among AE central Index (CSI) sequentially improved although it banks, the US, Japan, UK, Sweden, Norway and Czech remained below the neutral mark. Meanwhile, the Republic kept their key rates unchanged in March while Future Expectations Index (FEI) strengthened further, the ECB and Switzerland reduced it by 25 bps each. indicating optimistic outlook of the respondents Australia, Canada and Israel maintained a status quo on a net basis (Chart III.1a). Supply chain pressures in their April meetings whereas New Zealand cut its continued to remain below historical average levels official cash rate by 25 bps (Chart II.10a). Among EME in March (Chart III.1b). central banks, Poland and Peru maintained a status quo in April, and China, Russia, Hungary, Indonesia, Aggregate Demand South Africa, and Chile opted to maintain their High frequency indicators suggest that aggregate policy rates unchanged in March. Mexico cut its demand remained broadly resilient during Q4:2024- policy rate by 50 bps in March and Philippines 25. Indicators such as E-way bills and toll collections reduced its key rate by 25 bps in April. In contrast, recorded robust y-o-y growth in double digits in Brazil hiked the policy rate by 100 bps in March March 2025, despite a sequential moderation in the (Chart II.10b). latter (Chart III.2a and Chart III.2b). 140 RBI Bulletin April 2025 stniop sisaB stniop sisaB 100 60 0 0 -25 -25 -100 -75 -75 -100 -150 -150 -150 -200 -175 -200 -225 -300 -300 ailartsuA adanaC dnalreztiwS cilbupeR hcezC kramneD modgniK detinU learsI napaJ yawroN dnalaeZ weN aibreS nedewS setatS detinU aerA oruE 250 250 150 50 -50 0 -150 -35 -25 -50 -75 -100 -100 -250 -200 -225 -350 -325 -350 lizarB elihC anihC aibmoloC aisenodnI aidnI ocixeM aisyalaM ureP senippilihP aibarA iduaS acirfA htuoSState of the Economy ARTICLE Automobile sector showed signs of improvement recorded a y-o-y contraction in both non-transport and in March. Wholesale automobile sales recorded transport vehicles segments (Chart III.3c). Petroleum a double-digit growth in March; scooter sales consumption declined by 3.1 per cent (y-o-y) in contributed significantly to overall two wheeler March (Chart III.3d). sales indicating strong rural demand (Chart III.3a As per the PMI survey, job creation in both and 3b). Tractor sales also registered a double-digit organised manufacturing and services sectors growth for the fourth consecutive month. Despite continued to expand despite a sequential deceleration a sequential improvement, vehicle registrations in the pace of expansion (Chart III.4). Chart III.2: E-way Bills and Toll Collections a. E-way Bills b. Toll Collections GST E-way bill inter-state E-way bills growth (RHS) GST E-way bill intra-state Sources: GSTN; and RBI. RBI Bulletin April 2025 141 stinu noilliM y-o-y ,tnec reP )001=9102( xednI y-o-y ,tnec reP 140 25 44 120 20.2 20 100 15 80 60 80.5 10 40 5 20 0 0 Volume Volume growth (RHS) Value Value growth (RHS) 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 1400 50 1230 1200 40 1012 1000 30 800 600 20 400 10 200 0 0 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM Chart III.1: Economic Activity Indicators a. Consumer Confidence Indices b. Index of Supply Chain Pressures for India (ISPI) Sources: CCS, RBI; and RBI staff estimates. 14.5 11.9 xednI egareva morf snoitaived dradnatS 140 122.4 120 95.5 100 80 60 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 3 2 1 0 -1 -0.37 -2 -3 Current situation index Future expectations index 11-raM 11-peS 21-raM 21-peS 31-raM 31-peS 41-raM 41-peS 51-raM 51-peS 61-raM 61-peS 71-raM 71-peS 81-raM 81-peS 91-raM 91-peS 02-raM 02-peS 12-raM 12-peS 22-raM 22-peS 32-raM 32-peS 42-raM 42-peS 52-raMARTICLE State of the Economy With the commencement of the rabi harvest, the Rural Employment Guarantee Scheme (MGNREGS) demand for work under the Mahatma Gandhi National declined in March. Annual demand for work during 2024-25 declined compared to the previous year by Chart III.4: PMI Employment Indices 7.4 per cent (Chart III.5a), The daily wages under the MGNREGS have increased between 2.3 per cent to 7.5 per cent (₹7 - ₹26 per day) across states with effect from April 01, 2025 (Chart III.5b). India’s merchandise exports grew by 0.7 per cent (y-o-y) to US$ 42.0 billion in March 2025 – marking a rebound after four straight months of contraction – driven by a recovery in non-oil exports (Chart III.6). Exports of 18 out of 30 major commodities (accounting for 42.0 per cent of export basket in 2023-24) expanded on a y-o-y basis in March. Electronic goods, drugs and pharmaceuticals, gems and jewellery, marine products, and rice supported Note: A PMI value above 50 indicates expansion. Source: S&P Global. export growth in March while, organic and inorganic 142 RBI Bulletin April 2025 )egnahc oN = 05( xednI 58 57 56 55 54 53.4 53 52.5 52 51 50 49 48 Manufacturing Services 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM Chart III.3: Automobile Sector Indicators Source: Society of Indian Automobile Manufacturers (SIAM). Sources: SIAM; and Tractor and Mechanization Association (TMA). Source: Ministry of Road Transport and Highways. Source: Petroleum Planning and Analysis Cell. sdnasuohT y-o-y ,tnec reP y-o-y ,tnec reP snoilliM sdnasuohT y-o-y ,tnec reP a. Automobile Sales b. Rural Demand c. Vehicle Registrations d. Petroleum Consumption noillim ni rebmuN sennot noilliM Motorcycle sales Three wheeler sales (RHS) Total automobile sales Automobile sales growth (RHS) Scooters Tractor sales (RHS) 3.5 45 3.0 35 2.5 25 2.0 15 1.5 1.9 5 1.0 -0.7 0.5 -5 0.0 0.2 -15 Non-transport vehicles Transport vehicles Total registrations growth (RHS) 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 14 12 12 10 8 10 6 8 4 6 2 0 4 -2 2 -3.1 -4 0 -6 Petrol ATF Diesel Growth in average daily petroleum consumption (RHS) 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 3000 35 30 2500 25 2049 2000 20 15 1500 10 1000 5 0 500 -5 0 -10 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 2.5 160 140 2.0 120 1.5 1.0 100 79.9 80 1.0 60 62.8 10.0 40 0.5 0.6 20 0.0 0 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raMState of the Economy ARTICLE Chart III.5: Demand for Work and Wage Revision under MGNREGS a. Demand for Work b. Revision in MGNREGA Wages (April 2025) Source: Ministry of Rural Development. chemicals, petroleum products, engineering goods, and textiles, while petroleum products, gems and handicrafts excluding handmade carpet, and spices jewellery and iron ore dragged exports down. contributed negatively (Chart III.7). Exports to 10 out of 20 major destinations During 2024-25 (April-March), India’s merchandise expanded in March 2025, while exports to 13 out of exports expanded marginally by 0.1 per cent to US$ 20 major destinations expanded during 2024-25, with 437.4 billion, primarily led by electronic goods, the US, the UAE and the Netherlands being the top engineering goods, drugs and pharmaceuticals, rice, three export destinations. RBI Bulletin April 2025 143 )erorc( sdlohesuoh fo rebmuN 5 4 3 2 1.9 1 0 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 rpA yaM nuJ luJ guA peS tcO voN ceD naJ beF raM 5.0 Y-o-y change (per cent) 5.6 6.3 4.1 7.5 2.9 7.4 7.5 5.1 2.3 6.0 2.3 2.3 5.3 Chart III.6: India's Merchandise Exports a. Trend in Exports b. Decomposition of Sequential Change in Export Growth (y-o-y) noillib $SU tnec reP Note: POL: Petroleum, oil and lubricants. Sources: PIB; DGCI&S; and RBI staff estimates. tnec rep ni htworG 45 40 40 30 35 30 20 13.7 25 10 20 0.7 15 0 10 -10 5 0 -20 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 25 20 15 12 10 5 0 -5 -10 -15 -20 -25 Non-POL Y-o-y, growth (RHS) POL M-o-m, growth (RHS) Base effect Momentum ∆ in y-o-y growth 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raMARTICLE State of the Economy Chart III.9: India's Merchandise Imports – Relative Contribution (March 2025 over March 2024) Gold Petroleum, Crude & products Electronic goods Machinery, electrical & non-electrical Chemical material & products Project goods Pearls, precious & Semi- precious stones Silver Transport equipment Coal, Coke & Briquettes, etc. -2 0 2 4 6 Percentage point Sources: PIB; and RBI staff estimates. Merchandise imports at US$ 63.5 billion expanded products supported the import growth, while coal, by 11.4 per cent (y-o-y) in March 2025, mainly due coke and briquettes, transport equipments, silver, to increasing oil, gold and electronic imports. Out of pearls, precious and semi-precious stones and project 30 major commodities, 22 commodities (accounting goods dragged imports down (Chart III.9). for 81.7 per cent of import basket) registered an During 2024-25, India’s merchandise imports at expansion on y-o-y basis (Chart III.8). US$ 720.2 billion increased by 6.2 per cent (y-o-y), Gold, petroleum, crude and products, electronic mainly led by gold, electronic goods, and petroleum, goods, machinery, and chemical material and crude and products, while coal, coke and briquettes, Chart III.8: India's Merchandise Imports a. Trends in Imports b. Decomposition of Sequential Change in Import Growth (y-o-y) Note: POL: Petroleum, oil and lubricants. Sources: PIB; DGCI&S; and RBI staff estimates. 144 RBI Bulletin April 2025 noillib $SU tnec rep ni htworG tnec reP 80 60 70 50 60 40 50 30 24.6 40 20 11.4 30 10 20 0 10 -10 0 -20 Non-POL non-gold Y-o-y, growth (RHS) Gold POL M-o-m, growth (RHS) 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 30 29 20 10 0 -10 -20 -30 Base effect Momentum ∆ in y-o-y growth 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM Chart III.7: India's Merchandise Exports – Relative Contribution (March 2025 over March 2024) Electronic Goods Drugs & Pharmaceuticals Gems & Jewellery Marine Products Rice Spices Handicrafts excl. handmade carpet Engineering Goods Petroleum Products Organic & Inorganic Chemicals -3 -1 1 3 Percentage points Sources: PIB; and RBI staff estimates.State of the Economy ARTICLE etc., pearls, precious and semi-precious stones Services exports grew by 11.6 per cent (y-o-y) to US$ contributed negatively. 31.6 billion due to a rise in exports of software and business services, while services imports contracted Imports from 11 out of 20 major source countries by 4.8 per cent (y-o-y) to US$ 14.5 billion (Chart III.12). contracted in March 2025, while imports from 13 out of 20 major source countries expanded in 2024-25. During April-February 2024-25, the gross fiscal Among major trading partners, imports from China, deficit (GFD) –as a proportion of the revised estimates UAE and the US increased, while imports from Russia (RE) – was lower whereas the revenue deficit (RD) declined in March. stood higher than the corresponding period of the Merchandise trade deficit widened to US$ 21.5 Chart III.12: Services Exports and Imports: billion in March 2025 from US$ 15.3 billion in March Growth Rates 2024. Oil deficit increased to US$ 14.1 billion in March from US$ 10.9 billion a year ago. However, its share in total trade deficit fell to 65.5 per cent in March from 71.3 per cent a year ago. Similarly, non- oil deficit widened to US$ 7.4 billion in March from US$ 4.4 billion a year ago (Chart III.10). During 2024-25, merchandise trade deficit widened to US$ 282.8 billion from US$ 241.1 billion a year ago. Petroleum products were the largest source of deficit, followed by electronic goods and gold (Chart III.11). In February 2025, net services export earnings Source: RBI. recorded a robust y-o-y growth of 30.6 per cent. RBI Bulletin April 2025 145 )y-o-y( tnec reP 35 30 25 20 15 11.6 10 5 0 -5 -4.8 -10 -15 Exports Imports 32-naJ 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF Chart III.11: Commodity-wise Merchandise Trade Deficit Note: Coal, coke and briquettes exports in March and February 2025 are assumed to be at the same level as in January 2025. Gold exports are estimated. Sources: PIB; DGCI&S; and RBI staff estimates. noillib $SU Chart III.10: Decomposition of India’s Merchandise Trade Deficit 350 300 282.8 250 241.1 200 150 100 50 0 2023-24 2024-25 Petroleum products Electronic goods Others Coal, coke and briquettes Gold Sources: PIB; and DGCI&S. noillib $SU tnec reP 40 80 65.5 35 70 30 60 25 50 20 40 15 14.1 30 10 10.9 20 5 10 7.4 4.4 0 0 Non-oil deficit Share of oil in trade deficit (RHS) Oil deficit 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raMARTICLE State of the Economy previous year. However, the gross primary deficit of top six ministries (with the highest share in as proportion of RE remained the same as last year capex) was broadly in line with that of the pattern (Chart III.13a). During April-February 2024-25, the observed in 2023-24 (RE), except for the Ministry of key fiscal indicators on the receipts and expenditure Communications (Chart III.14). front, such as revenue receipts, revenue expenditure On the receipts side, the revenue receipts of and, non-debt capital receipts (as per cent of RE for the Union government registered a y-o-y growth of 2024-25) remained broadly in line with the pattern of 13.5 per cent during April-February 2024-25 vis-à-vis the previous year (Chart III.13b). a growth of 11.6 per cent registered during the The total expenditure of the Union government Chart III.14: Ministry wise Capital Expenditure increased by 3.9 per cent during April-February during April-February 2024-25 vis-à-vis a growth of 7.3 per cent during April-February 2023-24. Amongst the expenditure components, revenue expenditure recorded a growth of 4.7 per cent (y-o-y) during April-February 2024- 25 in comparison to 1.3 per cent witnessed during the corresponding period of the previous year. Revenue expenditure excluding interest payments and major subsidies grew by 3.9 per cent on a y-o-y basis, achieving 81.1 per cent of its target for 2024- 25 (RE). Capital expenditure witnessed a growth of 0.8 per cent during April-February 2024-25 over the corresponding period of the previous year. As per cent of the RE for 2024-25, the capital expenditure Sources: Union budget documents; and CGA. 146 RBI Bulletin April 2025 ER fo tnec reP 100 88.5 91.0 88.0 88.4 90 80 72.3 70 60 50 40 30 16.8 20 10 0 daoR fo yrtsiniM tropsnarT syawhgiH dna syawliaR fo yrtsiniM ecnaniF fo yrtsiniM ecnefeD fo yrtsiniM fo yrtsiniM snoitacinummoC gnisuoH fo yrtsiniM sriaffA nabrU dna Chart III.13: Major Fiscal Indicators during April-February a. Deficit Indicators b. Receipts and Expenditure Sources: Union budget documents; and CGA. 2023-24 2024-25 ER fo tnec reP ER fo tnec reP 95 93.8 91.3 90 85.8 85 80 75 70 32-2202 42-3202 52-4202 100 83.3 79.7 81.2 80 63.3 60 40 20 0 Gross fiscal deficit Revenue deficit Gross primary deficit euneveR erutidnepxe latipaC erutidnepxe euneveR stpiecer latipac tbed-noN stpiecer 2022-23 2023-24 2024-25State of the Economy ARTICLE corresponding period of the previous year. Direct tax registered positive y-o-y growth for most months, taxes increased by 13.3 per cent on a y-o-y basis thereby augmenting the growth of tax revenue whereas indirect taxes registered a growth of 7.9 collections in 2024-25 (Chart III.15b). per cent, leading to a growth in gross tax revenue by The collections from securities transaction tax 10.9 per cent. The robust growth in tax collections (STT) grew by 65.2 per cent y-o-y during April-February was mainly driven by income tax, GST, and customs 2024-25 (Chart III.16a). Non-tax revenue collections duties (Chart III.15a). Similarly, in terms of month- grew by 36.9 per cent during April-February 2024- wise performance, collections from GST and income 25, on the back of surplus transfer of ₹2.11 lakh Chart III.16: Monthly Trends in STT and GST b. GST (Centre plus States) Sources: CGA; Press Information Bureau (PIB); and GST Portal. RBI Bulletin April 2025 147 erorc dnasuoht ₹ 250 196 200 150 100 50 0 rpA yaM nuJ luJ guA peS tcO voN ceD naJ beF raM rpA yaM nuJ luJ guA peS tcO voN ceD naJ beF raM a. STT 2023-24 2024-25 erorc ₹ 6000 5000 4686 4000 3000 2000 1000 0 rpA yaM nuJ luJ guA peS tcO voN ceD naJ beF raM rpA yaM nuJ luJ guA peS tcO voN ceD naJ beF Chart III.15: Tax Receipts during April-February a. Tax Revenue b. Monthly Major Tax Revenue 2023-24 2024-25 )tnec rep ni( htworg y-o-Y )tnec rep( htworg y-o-Y 30 25 22.0 20 15 11.6 10 4.2 5 1.9 0 -5 -1.4 -10 Sources: Union budget documents; and CGA. noitaroproC xat emocnI xat TSG smotsuC seitud esicxe noinU seitud 80 60 40 20 0 -20 -40 -60 -80 Direct tax Indirect tax Income tax Gross tax revenue 2023-24 2024-25 GST lirpA yaM enuJ yluJ tsuguA rebmetpeS rebotcO rebmevoN rebmeceD yraunaJ yraurbeFARTICLE State of the Economy crore from the Reserve Bank. Overall, total receipts per cent of their budget estimates for 2024-25, higher expanded by 13.4 per cent during April-February than last year’s level of 58.0 per cent (Chart III.17a). 2024-25 vis-à-vis a growth of 10.1 per cent during the States’ revenue receipts recorded a moderate growth corresponding period of the previous year. of 7.3 per cent during 2024-25, primarily due to a decline in grants from the Centre. Tax revenues In March 2025, gross GST collections (Centre plus remained resilient, growing by 11.2 per cent, albeit States) rose to ₹1.96 lakh crore, the second highest lower than the growth of 15.9 per cent witnessed in monthly collection since its inception in 2017. The cumulative GST collection during 2024-25 amounted the previous year (Chart III.17b). The States’ Goods to ₹22.09 lakh crore, 9.4 per cent higher than during and Services Tax (SGST) experienced robust growth, 2023-24 (Chart III.16b). Notwithstanding the global while State excise growth decelerated. Additionally, challenges, the robust GST collection in recent times sales tax/VAT rebounded after a decline in the underlines the resilience of domestic economic previous year. activity. States’ revenue expenditure increased by 11.2 As per the provisional data available up to per cent during April-February 2024-25, while capital February 2025, States’ combined GFD reached 64.2 expenditure experienced a modest growth of 1.1 Chart III.17: States’ Fiscal Position (April – February) a. Key Deficit Indicators b. Revenue Receipts c. Expenditure d. Quality of Expenditure Note: Data pertains to 20 States. Source: Comptroller and Auditor General of India. 148 RBI Bulletin April 2025 EB fo tnec reP )tnec rep( etar htworg y-o-Y )tnec rep( htworg y-o-Y tnec reP oitaR 78 00 69.0 64.2 20 15.9 58.0 15 13.9 56 00 49.0 10 10.1 7.3 11.2 9.1 40 35.4 5 30 0 20 -5 10 -10 0 -10 -15 -20 -20 -30 -19.2 -25 -20.6 -22.2 Revenue Gross fiscal Primary Revenue Tax Non-tax Grants deficit deficit deficit receipts revenues revenues 2023-24 2024-25 2022-23 2023-24 2024-25 35 25 10 30 29.9 20 7.3 7.1 6.0 6.8 8 15 6 25 10 11.3 11.9 12.2 14.1 15.3 12.7 4 20 5 2 15 0.0 11.2 0 0 10 9.4 -5 -3.7 -2 5 1.1 2021-22 2022-23 2023-24 2024-25 0 Revenue Capital Revenue deficit to gross fiscal deficit (RD-GFD) expenditure expenditure Capital outlay to total expenditure (CO-TE) 2022-23 2023-24 2024-25 Revenue expenditure to capital outlay (RECO) (RHS)State of the Economy ARTICLE per cent (Chart III.17c). During April-January 2024- Chart III.18: Weekly Summer (Zaid) 25, the Union government has released ₹1.1 lakh Sowing Progress (as on April 11) crore as financial assistance under the ‘Scheme for Special Assistance to States for Capital Investment’, amounting to 88.6 per cent of the revised estimate of ₹1.25 lakh crore for 2024-25. The revenue expenditure to capital outlay (RECO) ratio of states rose to 6.8 during April-February 2024-25 on account of a faster growth in revenue expenditure, thereby weakening the quality of expenditure (Chart III.17d). Similarly, the share of capital outlay in total expenditure (CO- TE) declined from 14.1 per cent last year to 12.7 per cent during 2024-25. Aggregate Supply Source: Ministry of Agriculture and Farmers’ Welfare. As on April 11, 2025, 92.4 per cent of summer during the summer months (April to June), raising sowing was completed and the acreage was 14.7 concerns on summer crops (Chart III.19). Nonetheless, per cent higher than the levels recorded a year ago the western disturbance induced rains in the selected (Chart III.18). Area under all the major crops recorded regions could keep the temperature rise under control. higher acreage compared to the previous year. Additionally, harvesting of majority of rabi crops (viz., The above normal temperature (maximum as well wheat, rapeseed, mustard and chana) is expected to as minimum) and above normal number of heatwave be completed by April, making heatwaves less of a days are estimated over most parts of the country concern for them (Chart III.19). Chart III.19: Temperature Outlook for April (Probability Forecast) a. Maximum Temperature b. Heatwave events Source: India Meteorological Department (IMD). RBI Bulletin April 2025 149 eratceh hkal ni aerA tnec reP 70 65.9 140 57.5 60 120 50 100 92.4 40 80 31.5 27.6 30 60 20 13.8 40 11.5 11.5 9.9 8.69.1 10 20 0 0 Rice PulsesCoa rse Oilseeds Total cereals 2024 2025 Per cent of full season normal area (RHS)ARTICLE State of the Economy The reservoir levels (based on 161 major per cent higher than last year). Additionally, wheat reservoirs) were at 37 per cent of total reservoir procurement for RMS 2025-26 has started, and 48.02 capacity (as of April 11, 2025), which is higher than lakh tonnes of wheat have been procured as on April the previous year as well as the decadal average 17, 2025. levels (Chart III.20). Rice stocks held by the Food Corporation of As per the IMD’s first stage long-range forecast, India (as on April 1, 2025) reached 631 lakh tonnes, the rainfall during southwest monsoon season (June- which is 4.6 times the buffer requirements. Wheat September 2025) is most likely to be above normal stock stood at 118 lakh tonnes, which is 1.6 times at 105 per cent of the long period average (with a the buffer norms. To manage overall food security model error of ±5 per cent). The neutral El-Nino- and to prevent speculation, the Union government Southern Oscillations (with features similar to La has mandated the traders/wholesalers, retailers, Nina), neutral Indian Ocean Dipole, and below big chain retailers and processors to declare their normal snow cover over the northern hemisphere stock position of wheat as on April 01, 2025 and and Eurasia during January - March 2025 are other subsequently on every Friday (Chart III.21). favourable factors for monsoon precipitation. These India’s manufacturing PMI reached an eight- developments have boosted the crop prospects for month high in March 2025, reflecting acceleration in the forthcoming kharif season. new orders and output (Chart III.22a). The services Rice procurement for the kharif marketing PMI, however, recorded a marginal deceleration in season 2024-25 (Oct-Sep) at 516.3 lakh tonnes (as March, although it continued to remain strongly on April 17, 2025) was 6.5 per cent higher than the in expansionary territory (Chart III.22b). Business previous year. Wheat procurement for rabi marketing expectations/future output assessments moderated season (RMS) 2024-25 ended at 265.9 lakh tonnes (2 slightly for manufacturing and services. Chart III.20: Reservoir Level (as on April 11) Source: Central Water Commission. 150 RBI Bulletin April 2025 level riovreser lluf fo tnec reP 50 45 43 45 40 36 37 3333 35 30 30 23 25 20 15 10 5 0 Last 10years average 2024 2025 nrehtroN nretsaE nretseW lartneC nrehtuoS aidnI llA Chart III.21: Procurement and Stocks of Foodgrains Note: *: As on April 17 for rice and as on March 31 for wheat; #: As on April 01. Source: Food Corporation of India. sennot hkaL 700 631.0 600 531.5 516.3 484.7 500 400 300 260.7 265.9 200 117.9 100 75.0 0 KMS 2023-24 KMS 2024-25 RMS 2023-24 RMS 2024-25 Rice Wheat Procurement* Stock#State of the Economy ARTICLE Among the high frequency indicators of The construction sector reflected a mixed industrial activity, growth in port traffic accelerated picture as cement production recorded double-digit in March 2025, driven by higher growth in petroleum, y-o-y growth in February while steel consumption oil and lubricants (POL) and other miscellaneous recorded a decline in March (Chart III.24). cargo (Chart III.23). Chart III.23: Port Cargo Source: Indian Ports Association. RBI Bulletin April 2025 151 y-o-y ,tnec reP 80 61.8 60 40 17.1 20 13.8 9.3 0 1.0 -20 -40 -45.3 -60 POL Raw fertiliser Thermal coal Total Containerised cargo Other miscellaneous cargo 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM Chart III.22: Purchasing Managers’ Index a. Manufacturing b. Services egnahc oN = 05 Note: A level of 50 corresponds to no change in activity and a reading above 50 denotes expansion and vice versa. Source: S&P Global. egnahc oN = 05 70 65 64.4 60 58.1 55 50 45 PMI Future output PMI Future activity 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 70 65 61.5 60 58.5 55 50 45 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raMARTICLE State of the Economy Chart III.24: Steel Consumption and Cement Production Sources: Joint Plant Committee; Office of the Economic Adviser; and Ministry of Commerce and Industry. Available high frequency indicators for the economic activity in March (Table III.1). services sector reflect broad based growth in 152 RBI Bulletin April 2025 sennot noilliM y-o-y ,tnec reP 45 25 40 20 35 30 15 25 10 20 15 5 10 0 5 -0.5 0 -5 Cement production Steel consumption growth (RHS) Steel consumption Cement production growth (RHS) 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM Table III.1: High Frequency Indicators- Services (y-o-y, per cent) Sector Indicator Mar-24 Apr-24 May-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Urban demand Passenger Vehicles Sales 8.9 1.2 4.3 4.9 -2.0 -1.6 -0.4 1.1 4.4 11.4 3.5 3.7 3.7 Two-Wheeler Sales 15.3 30.8 10.1 21.3 12.5 9.3 15.8 14.2 -1.1 -8.8 2.1 -9.0 11.4 Rural demand Three-Wheeler Sales 4.3 14.5 14.4 12.3 5.1 8.0 6.7 -0.7 -1.3 3.5 8.6 4.7 10.5 Tractor Sales -23.1 -3.0 0.0 3.6 1.6 -5.8 3.7 22.4 -1.3 14.0 11.4 35.9 25.4 Commercial Vehicles Sales -3.8 3.5 -11.0 1.3 1.6 Railway Freight Traffic 8.6 1.4 3.7 10.1 4.5 0.0 -5.8 1.5 1.2 Port Cargo Traffic 2.7 1.3 3.8 6.8 5.9 6.7 5.8 -3.4 -4.9 3.4 7.6 3.6 13.8 Domestic Air Cargo Traffic 8.7 0.3 10.3 10.3 8.8 0.6 14.0 8.9 0.3 4.3 6.9 -2.5 International Air Cargo Traffic 22.5 16.2 19.2 19.6 24.4 20.7 20.5 18.4 16.1 10.5 7.1 -6.3 Trade, hotels, Domestic Air Passenger Traffic* 4.7 3.8 5.9 6.9 7.6 6.7 7.4 9.6 13.8 10.8 14.1 12.1 10.1 transport, International Air Passenger Traffic* 15 16.8 19.6 11.3 8.8 11.1 11.2 10.3 10.7 9.0 11.1 7.7 4.7 communication GST E-way Bills (Total) 13.9 14.5 17.0 16.3 19.2 12.9 18.5 16.9 16.3 17.6 23.1 14.7 20.2 GST E-way Bills (Intra State) 15.8 17.3 18.9 16.4 19.0 13.1 19.0 18.3 5.4 17.9 23.3 14.9 20.3 GST E-way Bills (Inter State) 10.7 9.6 13.6 16.3 19.6 12.5 17.7 14.4 44.1 17.1 22.8 14.4 20.1 Hotel occupancy 2.7 -1.4 -2.6 -3.1 3.6 0.7 2.1 -5.3 11.1 -0.2 1.2 0.6 Average revenue per room 6.7 4.8 1.8 2.8 7.6 5.2 3.5 4.8 10.7 8.9 8.7 14.0 Tourist Arrivals 8.0 7.7 0.3 9.0 -1.3 -4.2 0.4 -1.4 -0.1 -6.6 -0.2 -8.6 Steel Consumption 11.6 9.6 15.9 19.5 14.4 10.0 11.8 8.9 9.5 5.2 10.9 10.9 -0.5 Construction Cement Production 10.6 0.2 -0.6 1.8 5.1 -2.5 7.6 3.1 13.1 4.6 14.6 10.5 PMI Index# Services 61.2 60.8 60.2 60.5 60.3 60.9 57.7 58.5 58.4 59.3 56.5 59.0 58.5 <<Contraction------------------------------------------------------- Expansion>> Note: #: Data in levels. *: March 2025 data are based on the monthly average of daily figures. The Heat-map is constructed for each indicator for the period July-2021 till date. Sources: SIAM; Ministry of Railways; Tractor and Mechanisation Association; Indian Ports Association; Office of Economic Adviser; GSTN; Airports Authority of India; HVS Anarock; Ministry of Tourism; Joint Plant Committee; and IHS Markit.State of the Economy ARTICLE Source: NITI Aayog. India has been working diligently towards large hydro (6.32 per cent). India is also enhancing adapting to climate change while mitigating the its nuclear power capacity to meet growing energy risks from them. India’s climate actions for energy demand from non-renewable sources. There has conservation have been on track as compared to other been more than 70 per cent increase in India’s emerging market economies. India’s economy has nuclear power capacity from 4,780 MW in 2010- become increasingly energy-efficient, with energy 11 to 8,180 MW in 2024. Further, India plans to intensity11 reducing from 0.27 Mega Joules/₹ in 2014- increase its nuclear power capacity to 22,480 MW 15 to 0.22 Mega Joules/₹ in 2023-24 (Chart III.25). by 2031-32 (Chart III.26). The Union Budget 2025- The major energy conservation programmes being 26 announced a nuclear energy mission for research implemented by the government include perform, and development of Small Modular Reactors (SMR) achieve and trade (PAT) scheme for energy-intensive with an outlay of ₹20,000 crore and development industries; standards and labelling scheme for of nuclear energy capacity of 100 giga watt (GW) by appliances by the Bureau of Energy Efficiency (BEE); 2047.12 Unnat Jyoti by Affordable LEDs for All (UJALA) scheme; and adoption of electric mobility. Inflation According to the Energy Statistics of India 2025, Headline inflation, as measured by y-o-y changes the potential for energy generation from renewable in the all-India consumer price index (CPI)13, declined sources has been estimated at 21,09,655 megawatt to 3.3 per cent in March 2025 from 3.6 per cent in (MW) as on March 31, 2024. The highest potential February, marking the fourth consecutive monthly for energy generation comes from wind (55.17 per decline and the lowest reading since August 2019 cent), followed by solar energy (35.50 per cent) and 12 https://pib.gov.in/PressReleasePage.aspx?PRID=2099244 11 Energy intensity is defined as the amount of energy consumed to 13 As per the provisional data released by the National Statistical Office generate one unit of GDP at constant prices. (NSO) on April 15, 2025. RBI Bulletin April 2025 153 WM Chart III.26: Nuclear Energy Capacity Addition over the Years 1500 1420 1400 1200 1220 1200 1000 880 900 640 600 320 300 100 0 96-0691 97-0791 98-0891 99-0991 50-0002 01-6002 51-1102 02-6102 52-1202 Note: *: Provisional. Capacity addition Source: MoSPI. ₹/eluoj ageM Chart III.25: Energy Intensity in India 0.28 0.27 0.26 0.25 0.24 0.23 0.22 0.21 0.20 51-4102 61-5102 71-6102 81-7102 91-8102 02-9102 12-0202 22-1202 32-2202 *42-3202ARTICLE State of the Economy (Chart III.27). The decline in headline inflation by Fuel and light group registered an inflation of 1.5 approximately 30 basis points (bps) came entirely per cent (y-o-y) in March as against the contraction from a negative price momentum of around 30 of (-)1.3 per cent in February. This was the first bps in the absence of any base effect in March.14 positive y-o-y print for fuel group following eighteen Among the major groups, CPI food recorded a consecutive months of deflation. Kerosene prices negative momentum of around (-)0.7 per cent during moving out of deflation, a higher rate of inflation in the month, while momentum in CPI fuel and core electricity prices along with a lower rate of deflation (excluding food and fuel) groups was positive at 0.1 in LPG prices drove this turnaround. and 0.2 per cent, respectively. Core CPI inflation remained steady at 4.1 per Annual inflation in food group decelerated cent in March 2025, although contrarian trends were sharply to 2.9 per cent in March from 3.8 per cent witnessed within the sub-groups. Inflation increased in February. In terms of sub-groups, vegetables, in pan, tobacco and intoxicants, housing, health, pulses and eggs experienced further deflation. Spices transport and communication and education, while continued to remain in deflation, albeit at a slower it moderated in clothing and footwear, recreation pace. Inflation in cereals, meat and fish, and milk and and amusement, personal care and effects and products continued to moderate. Inflation in oils and household goods and services (Chart III.29). fats, fruits, sugar and confectionary, non-alcoholic beverages, and prepared meals, however, continued In terms of regional distribution, rural and urban to rise (Chart III.28). inflation eased to 3.25 per cent and 3.43 per cent, Chart III.27: Trends and Drivers of CPI Inflation a. CPI Inflation (y-o-y) 14 Base effect, i.e, the effect of changes in index during the previous year on current y-o-y inflation, was zero in March as CPI remained unchanged between February and March in 2024. 154 RBI Bulletin April 2025 tnec reP b. Contributions Sources: National Statistical Office (NSO); and RBI staff estimates. stniop egatnecrep ni noitubirtnoC 12 10 8 6 4.1 4 3.3 2 2.9 0 1.5 -2 -4 -6 Food and beverages CPI excluding food and fuel Food and beverages CPI excluding food and fuel Fuel and light CPI Headline (y-o-y, per cent) Fuel and light CPI Headline (y-o-y, per cent) 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 8 7 6 5 4 3.3 3 1.4 2 0.1 1 1.9 0 -1 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raMState of the Economy ARTICLE Chart III.28: Annual Inflation (y-o-y) and Momentum (m-o-m) across Sub-groups Sources: NSO; and RBI staff estimates. respectively, in March 2025. CPI inflation ranged with majority of the states registering less than 4 per between 1.1 per cent to 6.6 per cent at state-level, cent inflation (Chart III.30). Chart III.29: Annual Inflation across Sub-groups (March 2025 versusFebruary 2025) Sources: NSO; and RBI staff estimates. RBI Bulletin April 2025 155ARTICLE State of the Economy both rice and wheat. Pulses prices also continued to record a broad-based moderation. Edible oil prices, on the other hand, have firmed up - mainly for palm, soybean and sunflower oil. Among key vegetables, prices of potato and onion recorded further correction, while tomato prices witnessed a slight pick-up (Chart III.31). Retail selling prices of petrol and diesel have remained unchanged in April thus far (up to 15th). While kerosene prices picked up slightly, LPG prices were hiked by ₹50 per cylinder on April 8, 2025 (Table III.2). The PMIs for March 2025 recorded an uptick in the rate of expansion of input prices for High frequency food price data for April so far manufacturing, while for services sector it remained (up to 15th) show a moderation in cereal prices, for relatively sticky. Selling price pressures, however, Chart III.31: DCA Essential Commodity Prices Sources: Department of Consumer Affairs, GoI; and RBI staff estimates. 156 RBI Bulletin April 2025 margolik rep ₹ a. Cereals b. Pulses margolik rep ₹ c. Vegetables d. Edible Oils (packed) margolik rep ₹ Urad dal Tur/ Arhar dal Moong dal Rice Wheat Masoor dal Gram dal Potato Onion Tomato (RHS) Groundnut oil Mustard oil Sunflower oil margolik rep ₹ margolik rep ₹ 50 45 42.3 40 35 33.6 30 25 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 190 175 160 145 130 128.7 115 118.7 111.6 100 87.7 85 87.0 70 55 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 80 160 70 140 60 120 50 100 40 28.9 80 30 60 20 22.8 40 10 20 19.3 0 0 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA 200 191.4 190 180 171.1 170 160 150 158.1 140 130 120 32-rpA 32-nuJ 32-guA 32-tcO 32-ceD 42-beF 42-rpA 42-nuJ 42-guA 42-tcO 42-ceD 52-beF 52-rpA Chart III.30: Spatial Distribution of Inflation: March 2025 (CPI-Combined) <4 4-6 6-8 Note: Map is for illustrative purposes only. Sources: NSO; and RBI staff estimates.State of the Economy ARTICLE Table III.2: Petroleum Products Prices Item Unit Domestic Month-over- Prices month (per cent) Feb-25 Mar-25 Apr-25^ Mar-25 Apr-25^ Petrol ₹/litre 101.02 101.02 101.02 0.0 0.0 Diesel ₹/litre 90.48 90.48 90.48 0.0 0.0 Kerosene ₹/litre 46.37 46.23 46.56 -0.3 0.7 (subsidised) LPG ₹/cylinder 813.25 813.25 863.25 0.0 6.1 (non-subsidised) Notes: 1. ^: For the period April 1-15, 2025. 2. Other than kerosene, prices represent the average Indian Oil Corporation Limited (IOCL) prices in four major metros (Delhi, Kolkata, Mumbai and Chennai). For kerosene, prices denote the average of the subsidised prices in Kolkata, Mumbai and Chennai. Sources: IOCL; Petroleum Planning and Analysis Cell (PPAC); and RBI staff estimates. Source: IESH, RBI. moderated across manufacturing and services firms IV. Financial Conditions in March (Chart III.32). The seasonal increase in currency in circulation Households’ perception of the current inflation and RBI’s forex operations were the major drivers of declined by 50 bps to 7.8 per cent. Their inflation liquidity tightness during Q4:2024-25. Responding expectations also eased, with a reduction of 40 bps to the liquidity needs of the banking system, the and 50 bps for the next three months and one year, Reserve Bank has taken a slew of measures to inject respectively (Chart III.33). durable liquidity, apart from conducting daily variable RBI Bulletin April 2025 157 tnec reP Chart III.33: Households' Median Inflation Expectations 11 10 9.7 8.9 9 7.8 8 7 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM Current 3 months ahead 1 year ahead Chart III.32: PMI: Input and Output Prices a. Manufacturing Note: A level of 50 corresponds to no change in activity and a reading above 50 denotes expansion and vice versa. Source: S&P. )egnahc oN=05( xednI )egnahc oN=05( xednI b. Services 65 60 55 52.1 50 52.0 45 Input prices Output prices Input prices Prices charged 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 65 60 54.1 55 50.8 50 45 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raMARTICLE State of the Economy rate repo (VRR) auctions sine mid-January 2025. month-end. Furthermore, the aggregate limit available Consequently, liquidity deficit in the banking system to Standalone Primary Dealers (SPDs) under the moderated during February-March 2025, with average Standing Liquidity Facility (SLF) were increased from daily net injection under the Liquidity Adjustment ₹10,000 crore to ₹15,000 crore beginning April 2, 2025, Facility (LAF) declining to ₹1.1 lakh crore in March and a calendar of open market purchase operations 2025 as compared to ₹2.0 lakh crore in January 2025. were announced for April 2025. Effective March 26, 2025, SPDs were also allowed to participate in all repo Since January 2025, the Reserve Bank has operations, irrespective of the tenor. injected around ₹7.9 lakh crore of durable liquidity through a combination of open market operation The Reserve Bank has been conducting daily (OMO) purchases, longer-duration VRR auctions VRR auctions since January 16, 2025 and standalone and forex swaps, so far (Table IV.1). System liquidity primary dealers (SPDs) were allowed to participate in turned into surplus since March 29, 2025, after these auctions. An aggregate amount of ₹10.2 lakh a gap of over three months on account of RBI’s crore was injected into the banking system through liquidity augmenting measures along with the usual nineteen fine-tuning VRR operations of 1 to 5 days drawdown of government cash balances in the maturity during March 16 to April 17, 2025. Table IV.1: Durable Liquidity Measures since January 2025 (Amount in ₹ crore) Measures Auction Date Description Bid Cover Ratio Liquidity injected OMO Purchase January to March, 2025 Through NDS-OM 38,825 January 30, 2025 Notified Amount: 20,000 6.03 20,020 February 13, 2025 Notified Amount: 40,000 4.53 40,000 February 20, 2025 Notified Amount: 40,000 4.69 40,000 March 12, 2025 Notified Amount: 50,000 2.51 50,000 OMO Purchase March 18, 2025 Notified Amount: 50,000 2.02 50,000 auctions March 25, 2025 Notified Amount: 50,000 1.35 44,541 April 3, 2025 Notified Amount: 20,000 4.04 20,000 April 8, 2025 Notified Amount: 20,000 3.51 20,000 April 17, 2025 Notified Amount: 40,000 2.03 40,000 56-day VRR auction February 07, 2025 2.17 50,010 Notified Amount: 50,000 49-day VRR auction February 14, 2025 1.33 75,003 Notified Amount: 75,000 Term Repo Auctions 45-day VRR auction February 21, 2025 0.77 57,951 Notified Amount: 75,000 43-day VRR auction April 17, 2025 0.17 25,731 Notified Amount: 1,50,000 January 31, 2025 Tenor: 6 months 5.12 44,000* (Settlement on Feb 4, 2025) Notified Amount: USD 5 billion USD/INR Buy/Sell swap February 28, 2025 Tenor: 3 years 1.62 88,000* auctions (Settlement on Mar 4, 2025) Notified Amount: USD 10 billion March 24, 2025 Tenor: 3 years 2.23 86,000* (Settlement on Mar 26, 2025) Notified Amount: USD 10 billion Total 7,90,081* Note: *: indicates approximate value. Sources: RBI; and Monetary Policy Report, April 2025. 158 RBI Bulletin April 2025State of the Economy ARTICLE Chart IV.1: Liquidity Operations Daily SDF Variable rate reverse repo MSF Variable rate repo Net LAF Total absorption Source: RBI. The average daily net absorption under the February 16 to March 15, 2025 (Chart IV.2a). Rates liquidity adjustment facility (LAF) stood at ₹0.31 in the collateralised segment also moderated due to lakh crore during March 16 to April 17, 2025 as improving liquidity conditions. compared to average daily net injection of ₹1.46 Across the term money market segment, the lakh crore during February 16 to March 15, 2025 rates on 3-month certificates of deposit (CDs), (Chart IV.1). Banks’ placement of funds under the 3-month commercial papers (CPs) issued by non- standing deposit facility (SDF) averaged ₹2.13 lakh banking financial companies (NBFCs) and 91-day T-bills moderated since the latter part of March after crore during this period, higher than ₹1.12 lakh crore remaining elevated since mid-December 2024 (Chart in the previous month. The co-existence of deficit IV.2b). The average risk premia in the money market liquidity conditions and substantial fund placements (3-month CP [NBFC] minus 91-day T-bill) moderated under the SDF during mid-December 2024 to end- to 104 bps during the current period from 142 bps March 2025 suggests the asymmetric distribution during March 16 to April 16, 2025 (Chart IV.2c). of liquidity within the banking system. Meanwhile, During March 16 to April 16, 2025, the weighted daily average borrowings under the marginal standing average discount rate (WADR) of CPs and the facility (MSF) declined marginally to ₹0.04 lakh crore weighted average effective interest rate (WAEIR) of during this period. CDs remained lower by 59 bps and 6 bps, respectively, The weighted average call rate (WACR) – the than the levels recorded a year ago (Chart IV.3). operating target of monetary policy – broadly In the primary market, issuances of CDs reached remained within the policy corridor, barring the year- an all-time high of ₹11.75 lakh crore during 2024-25 end spike. The spread of the WACR over the policy (up to March 21, 2025) [Chart IV.4]. Banks’ reliance on repo rate averaged (-)1 basis point (bp) during March CDs to meet their funding requirements in March is 16 and April 16, 2025, compared to 5 bps during also a seasonal phenomenon. Similarly, CP issuances RBI Bulletin April 2025 159 erorc hkal ₹ 4.5 3.5 2.5 1.5 0.5 -0.5 -1.5 -2.5 -3.5 -4.5 42-rpA-81 42-rpA-92 42-yaM-01 42-yaM-12 42-nuJ-1 42-nuJ-21 42-nuJ-32 42-luJ-4 42-luJ-51 42-luJ-62 42-guA-6 42-guA-71 42-guA-82 42-peS-8 42-peS-91 42-peS-03 42-tcO-11 42-tcO-22 42-voN-2 42-voN-31 42-voN-42 42-ceD-5 42-ceD-61 42-ceD-72 52-naJ-7 52-naJ-81 52-naJ-92 52-beF-9 52-beF-02 52-raM-3 52-raM-41 52-raM-52 52-rpA-5 52-rpA-61ARTICLE State of the Economy Chart IV.2: Policy Corridor and Money Market Rates Sources: RBI; CCIL; and Bloomberg. at ₹15.74 lakh crore were higher by 14.5 per cent The yield on the 10-year G-sec benchmark during 2024–25 (up to March 31, 2025). softened to 6.39 per cent on April 16, 2025, as 160 RBI Bulletin April 2025 erorc hkal ₹ Repo rate WACR MSF SDF tnec reP tnec reP a. Policy Corridor and Call Rate b. Money Market Rates Tri-party repo Market repo 3-month T-bill 3-month CD 3-month CP (NBFC) c. Spread of 3-months CP and CD Rate over 91-day T-bill Rate stniop sisaB 180 4 160 3 140 2 120 1 100 0 80 84 -1 60 58 40 58 -2 20 -3 0 -4 Net LAF (RHS) SpreadofCD3Mrateover91-dayT-billrate Spread of CP NBFC 3M rate over 91 day T-bill rate SpreadofCPNon-NBFC3Mrateover91-dayT-billrate 22-peS 22-tcO 22-voN 22-ceD 32-naJ 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM 52-rpA 7.5 7.3 7.1 6.9 6.7 6.5 6.3 6.1 5.9 5.85 5.7 5.5 42-nuJ-62 42-luJ-01 42-luJ-42 42-guA-7 42-guA-12 42-peS-4 42-peS-81 42-tcO-2 42-tcO-61 42-tcO-03 42-voN-31 42-voN-72 42-ceD-11 42-ceD-52 52-naJ-8 52-naJ-22 52-beF-5 52-beF-91 52-raM-5 52-raM-91 52-rpA-2 52-rpA-61 8.8 8.5 8.2 7.9 7.6 7.3 6.76 7.0 6.7 6.5 6.4 6.1 5.92 5.8 55 .. 77 19 5.5 42-naJ-22 42-beF-12 42-raM-22 42-rpA-12 42-yaM-12 42-nuJ-02 42-luJ-02 42-guA-91 42-peS-81 42-tcO-81 42-voN-71 42-ceD-71 52-naJ-61 52-beF-51 52-raM-71 52-rpA-61 Chart IV.3: WADR and WAEIR Note: *: up to April 16, 2025. Sources: RBI; and CCIL- FTRAC. erorc dnasuoht ₹ tnec reP 800 9 8 600 7 400 6 95 5 200 12 4 0 3 2 -200 1 -400 0 Net LAF CP Issuance (monthly) CD Issuance (monthly) WADR (RHS) WAEIR (RHS) 12-beF 12-raM 12-rpA 12-yaM 12-nuJ 12-luJ 12-guA 12-peS 12-tcO 12-voN 12-ceD 22-naJ 22-beF 22-raM 22-rpA 22-yaM 22-nuJ 22-luJ 22-guA 22-peS 22-tcO 22-voN 22-ceD 32-naJ 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM *52-rpA 6.74 6.69State of the Economy ARTICLE Chart IV.4: Certificates of Deposit (CDs) and Commercial Paper (CP) - Fortnightly Issuances Source: RBI. compared to 6.70 per cent on March 17, 2025 (Chart The spread of the 10-year Indian G-sec yield over IV.5a). The moderation was on account of lower than the 10-year US bond yield moderated in March, driven expected inflation, open market operations by the by a fall in Indian yields. The spread has fallen in April Reserve Bank, and softening of global bond yields. so far (up to April 16, 2025), mainly due to spike in US The domestic yield curve softened across the term bond yields. The volatility of yields in India remained structure (Chart IV.5b). Between March 16 and April low relative to the US treasuries (Chart IV.6). 16, 2025, the average term spread (10-year G-sec yield minus 91-day T-bills yield) marginally hardened to 29 Corporate bond issuances at ₹8.77 lakh crore bps as compared to 27 bps during the previous period. were 16.3 per cent higher during 2024-25 (up to RBI Bulletin April 2025 161 erorc dnasuoht ₹ erorc dnasuoht ₹ 130 120 120 77.1 110 100 100 90 80 80 70 60 60 50 40 32.0 30 40 20 10 0 20 Certificates of deposit Commercial paper (RHS) 32-naJ 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM Chart IV.5: Developments in the G-sec Market a. Movement in 10-year G-sec Yield b. G-sec Yield Curve Sources: Bloomberg; CCIL; and RBI staff estimates. tnec reP tnec reP India US (RHS) tnec reP stniop sisaB 8.0 0 7.8 -10 7.6 7.4 -20 7.2 7.08 7.0 -30 6.99 6.8 -40 6.6 6.4 -50 6.2 6.0 -60 Tenor (years) 17-03-2025 16-04-2025 Change (Apr 16, 2025 over Mar 17, 2025) (RHS) 1 2 3 4 5 6 7 8 9 01 11 21 31 41 51 61 71 81 91 02 7.2 5.5 7.0 5.0 4.33 6.8 4.5 6.6 4.0 6.4 3.5 6.39 6.2 3.0 6.0 2.5 42-luJ-02 42-guA-7 42-guA-52 42-peS-21 42-peS-03 42-tcO-81 42-voN-5 42-voN-32 42-ceD-11 42-ceD-92 52-naJ-61 52-beF-3 52-beF-12 52-raM-11 52-raM-92 52-rpA-61ARTICLE State of the Economy Chart IV.6 : Volatility and Spread-Bond Market Note: * 12-months rolling standard deviation. Sources: Bloomberg; and RBI staff calculations. February) as compared to last year. Corporate bond of RM, stood at 5.9 per cent (y-o-y) as compared with yields moderated across rating spectrum and tenors, 3.8 per cent a year ago. while the corresponding risk premia exhibited mixed On the sources side (assets) of RM which include trends during the second half of March till April 15, both RBI’s net foreign assets (NFA) and net domestic 2025 (Table IV.2). assets (NDA), while foreign currency assets grew marginally by 4.9 per cent (y-o-y) as on April 11, Reserve money (RM), adjusted for the first-round 2025, gold increased by 47.9 per cent mainly due to impact of change in the cash reserve ratio (CRR), revaluation gains on account of higher gold prices recorded a growth of 6.5 per cent (y-o-y) as on April 11, (Chart IV.8). This led to a steady rise in its share in 2025 (6.3 per cent a year ago) [Chart IV.7]. Growth in NFA from 8.3 per cent as at end-March 2024 to 12.1 currency in circulation (CiC), the largest component per cent as on April 11, 2025. 162 RBI Bulletin April 2025 *noitaived dradnatS stniop sisaB 0.5 400 350 0.4 300 0.3 250 0.2 200 211 0.1 150 0 100 Volatility-US 10 year bond Volatility- India 10 year bond Spread of 10 year Indian G-sec over US 10 year bond (RHS) 32-nuJ-03 32-luJ-61 32-guA-1 32-guA-71 32-peS-2 32-peS-81 32-tcO-4 32-tcO-02 32-voN-5 32-voN-12 32-ceD-7 32-ceD-32 42-naJ-8 42-naJ-42 42-beF-9 42-beF-52 42-raM-21 42-raM-82 42-rpA-31 42-rpA-92 42-yaM-51 42-yaM-13 42-nuJ-61 42-luJ-2 42-luJ-81 42-guA-3 42-guA-91 42-peS-4 42-peS-02 42-tcO-6 42-tcO-22 42-voN-7 42-voN-32 42-ceD-9 42-ceD-52 52-naJ-01 52-naJ-62 52-beF-11 52-beF-72 52-raM-51 52-raM-13 52-rpA-61 Table IV.2: Financial Markets - Rates and Spread Interest Rates (per cent) Spread (basis points) (Over Corresponding Risk-free Rate) Feb 16, 2025 – Mar 16, 2025 – Feb 16, 2025 – Mar 16, 2025 – Instrument Variation Variation Mar 13, 2025 Apr 15, 2025 Mar 13, 2025 Apr 15, 2025 1 2 3 (4 = 3-2) 5 6 (7 = 6-5) Corporate Bonds (i) AAA (1-year) 7.85 7.43 -42 121 99 -22 (ii) AAA (3-year) 7.65 7.44 -21 96 94 -2 (iii) AAA (5-year) 7.60 7.42 -18 84 86 2 (iv) AA (3-year) 8.43 8.27 -16 174 177 3 (v) BBB- (3-year) 12.08 11.93 -15 539 543 4 Note: Yields and spreads are computed as averages for the respective periods. Sources: FIMMDA; and Bloomberg.State of the Economy ARTICLE Chart IV.7: Reserve Money and Currency in Circulation Reserve money (CRR adjusted) Currency in circulation N ote: Latest data for reserve money pertain to April 11, 2025. Source: RBI. Money supply (M ) rose by 9.5 per cent (y-o-y) as (16.0 per cent a year ago) on account of unfavourable 3 on April 4, 2025 (11.4 per cent a year ago).15 Aggregate base effect, which offset the positive momentum deposits with banks, accounting for around 86.5 per (Chart IV.9). cent of M , increased by 9.9 per cent (12.7 per cent a As on April 4, 2025, SCBs’ deposit growth 3 year ago). Scheduled commercial banks’ (SCBs’) credit (excluding the impact of the merger) decelerated to growth moderated to 12.0 per cent as on April 4, 2025 10.4 per cent from 13.3 per cent a year ago (Chart IV.10). 15 Excluding the impact of the merger of a non-bank with a bank (with effect from July 1, 2023). RBI Bulletin April 2025 163 y-o-y ,tnec reP 12 10 8 6.5 6 5.9 4 2 0 32-nuJ-9 32-luJ-7 32-guA-4 32-peS-1 32-peS-92 32-tcO-72 32-voN-42 32-ceD-22 42-naJ-91 42-beF-61 42-raM-51 42-rpA-21 42-yaM-01 42-nuJ-7 42-luJ-5 42-guA-2 42-guA-03 42-peS-72 42-tcO-52 42-voN-22 42-ceD-02 52-naJ-71 52-beF-41 52-raM-41 52-rpA-11 Chart IV.8: RBI's Net Foreign Exchange Assets (NFA) - Growth NFA Foreign currency assets Gold (RHS) Source: RBI. y-o-y ,tnec reP y-o-y ,tnec reP 25 70 60 20 50 47.9 15 40 30 10 8.7 20 5 4.9 10 0 0 32-nuJ-9 32-luJ-7 32-guA-4 32-peS-1 32-peS-92 32-tcO-72 32-voN-42 32-ceD-22 42-naJ-91 42-beF-61 42-raM-51 42-rpA-21 42-yaM-01 42-nuJ-7 42-luJ-5 42-guA-2 42-guA-03 42-peS-72 42-tcO-52 42-voN-22 42-ceD-02 52-naJ-71 52-beF-41 52-raM-41 52-rpA-11 Chart IV.9: M Growth and Credit Growth of SCBs – Base and Momentum Effect 3 Source: RBI. y-o-y ,tnec reP stniop egatnecreP 18 3 17 2 16 15 0.9 1 14 13 0 12 12.0 -1 11 -1.0 10 9.5 -2 9 8 -3 SCBs' credit growth M growth 3 SCBs' credit momentum effect (RHS) SCBs' credit base effect (RHS) 32-raM-01 32-rpA-7 32-yaM-5 32-nuJ-2 32-nuJ-03 32-luJ-82 32-guA-52 32-peS-22 32-tcO-02 32-voN-71 32-ceD-51 42-naJ-21 42-beF-9 42-raM-8 42-rpA-5 42-yaM-3 42-yaM-13 42-nuJ-82 42-luJ-62 42-guA-32 42-peS-02 42-tcO-81 42-voN-51 42-ceD-31 52-naJ-01 52-beF-7 52-raM-7 52-rpA-4ARTICLE State of the Economy SCBs' deposit growth SCBs' deposit momentum effect (RHS) SCBs' deposit base effect (RHS) Source: RBI. SCBs’ incremental credit-deposit ratio increased that have a longer reset period and are referenced to 89.1 per cent as on April 4, 2025 from a low of 80.7 to the cost of fund, may get adjusted with some lag. The weighted average lending rates (WALR) on per cent as on October 18, 2024. outstanding rupee loans of scheduled commercial In response to the 50-bps cut in the policy repo banks (SCBs) declined by 7 bps; however, it rate since February 2025, banks have reduced their has increased for fresh rupee loans by 8 bps in repo-linked EBLRs by a similar magnitude. The February (Table IV.3). In case of deposits, the weighted marginal cost of funds-based lending rate (MCLR) average domestic term deposit rate (WADTDR) on 164 RBI Bulletin April 2025 y-o-y ,tnec reP Chart IV.10: SCBs' Deposit Growth - Base and Momentum Effect stniop egatnecreP 14 4 3 2.4 13 2 1 12 0 11 -1 10.4 -2 10 -2.6 -3 9 -4 32-rpA-7 32-yaM-5 32-nuJ-2 32-nuJ-03 32-luJ-82 32-guA-52 32-peS-22 32-tcO-02 32-voN-71 32-ceD-51 42-naJ-21 42-beF-9 42-raM-8 42-rpA-5 42-yaM-3 42-yaM-13 42-nuJ-82 42-luJ-62 42-guA-32 42-peS-02 42-tcO-81 42-voN-51 42-ceD-31 52-naJ-01 52-beF-7 52-raM-7 52-rpA-4 Chart IV.11: Incremental Credit-Deposit Ratio Source: RBI. )erorc hkal ₹( eulaV )tnec rep( oitaR 26 120 24 110 22 21.6 100 89.1 20 90 19.3 18 80 16 70 14 60 Incremental credit-deposit ratio (RHS) Incremental credit Incremental deposit 32-beF-42 32-raM-13 32-yaM-5 32-nuJ-9 32-luJ-41 32-guA-81 32-peS-22 32-tcO-72 32-ceD-1 42-naJ-5 42-beF-9 42-raM-51 42-rpA-91 42-yaM-42 42-nuJ-82 42-guA-2 42-peS-6 42-tcO-11 42-voN-51 42-ceD-02 52-naJ-42 52-beF-82 52-rpA-4State of the Economy ARTICLE Table IV.3: Transmission to Banks’ Deposit and Lending Rates (Basis points) Term Deposit Rates Lending Rates Period Repo Rate WADTDR- WADTDR- EBLR 1-Yr. MCLR WALR Fresh WALR- Fresh Deposits Outstanding (Median) Rupee Loans Outstanding Deposits Rupee Loans (1) (2) (3) (4) (5) (6) (7) (8) Easing Phase -25 -8 0 -25 0 8 -7 Feb 2025 to Mar* 2025 Tightening Period +250 253 199 250 178 181 115 May 2022 to Jan 2025 Easing Phase -250 -259 -188 -250 -155 -232 -150 Feb 2019 to Mar 2022 Notes: Data on EBLR pertain to 32 domestic banks. *: Data on WADTDR and WALR pertain to February 2025. WALR: Weighted Average Lending Rate; WADTDR: Weighted Average Domestic Term Deposit Rate; MCLR: Marginal Cost of Funds-based Lending Rate; EBLR: External Benchmark-based Lending Rate. Source: RBI. fresh deposits moderated by 8 bps during the same The Government of India reviewed the interest period. rates on various small savings instruments, which are linked to secondary market yields on G-secs of The increase in WALR was higher in public sector comparable maturities and kept it unchanged for banks (PSBs) as compared to private banks; however, in case of outstanding loans the transmission was Q1:2025-26.16 As a result, the rates on most of the higher in PSBs during February 2025 (Chart IV.12). In instruments are now above the formula-based rates case of WADTDRs, both PSBs and foreign banks have in the range 16-66 bps.17 In a rate easing cycle when reduced their fresh deposit rates. deposit rates are expected to come down, higher small Chart IV.12: Transmission across Bank-group (February 2025) a. Lending Rates b. Deposit Rates Source: RBI. 16 https://dea.gov.in/sites/default/files/Revision%20of%20RoI.pdf 17 RBI Monetary Policy Report- April 2025, Chapter IV. RBI Bulletin April 2025 165 stniop sisaB stniop sisaB 10 9 5 2 1 1 5 4 0 0 -5 -6 -7 -5 -10 -5 -7 -8 -10 -15 -10 -15 -15 -20 WALR WALR WADTDR WADTDR (Fresh ₹ Loans) (Outstanding ₹ Loans) (Fresh Deposits) (Outstanding Deposits) PSBs PVBs FBs PSBs PVBs FBsARTICLE State of the Economy Chart IV.13 : Equity Market Performance a. Sectoral Returns in 2025 b. Index Members with New 52 Week Lows Per cent Note: Data up to April 17, 2025. Source: Bloomberg. savings rates can be a potential source of concern for Uncertainty in both domestic and global bank deposit growth. equity markets has continued to weigh on resource mobilisation through equity issuances (Chart IV.15a). Indian equity markets recorded gains in the There was no issuance of mainboard IPOs in March second half of March, aided by foreign portfolio 2025 — the first such instance since February 2023 investor (FPI) inflows, resilient economic activity (Chart IV.15b). and moderation in inflation. Equity markets, An analysis of sectoral equity market indices however, witnessed a sharp decline in early April, compiled by the Centre for Monitoring Indian tracking losses in global markets emanating from the imposition of reciprocal tariffs by the United States. The sharp sell-off on April 7, effectively eroded the gains recorded in the latter half of March, as 22 per cent of the Nifty 50 constituents and 26 per cent of the NSE 500 stocks registered fresh 52-week lows on the day (Chart IV.13). This was also associated with heightened volatility as the India VIX recorded its highest single-day percentage surge on April 07, 2025 (since November 2007) [Chart IV.14]. Domestic equity markets subsequently rebounded, tracking global market gains after the US announced a pause in reciprocal tariffs. Financial sector stocks led the recovery, supported by a decline in domestic CPI inflation in March 2025. 166 RBI Bulletin April 2025 secidnI tnec reP Bankex 7.9 35 Financial Services 6.1 Telecom 1.8 30 Communication 0.9 BSE Sensex 0.5 Utilities 0.4 25 Services 0.3 Energy 0.0 Metal -0.8 20 FMCG -1.0 PSU -1.2 15 Oil & Gas -1.8 Power -3.5 Auto -7.3 10 Healthcare -7.9 BSE Midcap -9.6 5 Capital Goods -9.8 Consumer Discretionary -10.7 Consumer Durable -11.4 0 BSE Smallcap -13.1 Industrials -13.6 Realty -20.4 IT -23.7 -30 -25 -20 -15 -10 -5 0 5 10 Nifty 50 NSE 500 4202-11-72 4202-21-40 4202-21-11 4202-21-81 4202-21-52 5202-10-10 5202-10-80 5202-10-51 5202-10-22 5202-10-92 5202-20-50 5202-20-21 5202-20-91 5202-20-62 5202-30-50 5202-30-21 5202-30-91 5202-30-62 5202-40-20 5202-40-90 5202-40-61 Chart IV.14: India VIX: Episodes of Sharp Volatility 90 Global market sell-off driven 80 by concerns over China's economic 70 slowdown 60 GFC 50 GFC 40 30 20 10 0 Sources: Bloomberg; and RBI staff calculations. egnahc tnec reP 5202 ,7 lirpA 5102 ,42 tsuguA 8002 ,51 yluJ 8002 ,72 rebotcO 4202 ,5 tsuguA 6102 ,92 rebmetpeS Escalation of Global Trade Tensions Recession Fears in the US Indo-Pak TensionsState of the Economy ARTICLE Economy (CMIE) indicates that sectors with a price-to-earnings (PE) ratios across various indices, substantial export exposure to the US have remained shows that forward PE ratios surged well above their 10-year averages in the early months of highly volatile so far in April 2025 (Chart IV.16). H2:2024-25. Following the correction in Indian Indian equities have historically traded at a equity markets since then, these ratios have now premium compared to other EMEs. An analysis approached their long-term average, signalling a of market valuation, measured by the premium/ moderation in market valuations to more sustainable discount relative to the 10-year average of forward levels (Chart IV.17). Chart IV.16: Performance of CMIE Sectoral Indices Electronics Industry Plastic Products Industry Gems & Jewellery Industry Petroleum Products Industry Drugs & Pharmaceuticals Industry Readymade Garments Industry Marine Foods Industry Cotton & Blended Yarn Industry Chemicals & Chemical Products Industry Automobiles & Ancillaries Industry Machinery Industry Metals & Metal Products Industry Note: Data up to April 17, 2025. Sources: CMIE; and RBI staff calculations. RBI Bulletin April 2025 167 no 001 ot delacs seulav xednI 5202 ,82 hcraM 125 120 115 110 105 100 95 90 85 80 52-raM-82 52-raM-92 52-raM-03 52-raM-13 52-rpA-1 52-rpA-2 52-rpA-3 52-rpA-4 52-rpA-5 52-rpA-6 52-rpA-7 52-rpA-8 52-rpA-9 52-rpA-01 52-rpA-11 52-rpA-21 52-rpA-31 52-rpA-41 52-rpA-51 52-rpA-61 52-rpA-71 Chart IV.15: Primary Market Activity a. Equity Market Resource Mobilisation b. Number of mainboard IPOs 80000 70000 60000 50000 40000 2,832 30000 20000 15,513 10000 0 Source: SEBI. 120 109 105 105 102101 101101 101100 96 95 erorc ₹ 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 16 14 12 10 8 6 4 2 0 0 IPO/FPO/Rights QIP Preferential Allotment 22-luJ 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raMARTICLE State of the Economy 120 100 80 60 40 20 0 -20 -40 -60 Gross inward foreign direct investment (FDI) to US$ 1.5 billion during this period owing to higher grew by 15.2 per cent (y-o-y) to US$ 75.1 billion during repatriation and outward FDI from India. Globally, 2024-25 (April - February) [Chart IV.18a]. Singapore the US remains the most favoured destination for was the largest source of equity inflows with a share inward FDI and is the second largest destination for of 29.8 per cent, followed by Mauritius and the US. overseas direct investment (ODI) from India in recent Manufacturing sector accounted for the highest years (Chart IV.18b). Moreover, multinationals have share (24.1 per cent) of FDI inflows, followed by been redirecting their investment plans to the US, financials services and electricity. Net FDI declined influenced by recent policy announcements. 168 RBI Bulletin April 2025 tnec reP Chart IV.17: 12-Month Forward PE Multiple Premium/Discount over 10-year Average BSE SENSEX BSE MidCap BSE Smallcap Sources: Bloomberg; and RBI staff calculations. 1202-70-71 1202-80-71 1202-90-71 1202-01-71 1202-11-71 1202-21-71 2202-10-71 2202-20-71 2202-30-71 2202-40-71 2202-50-71 2202-60-71 2202-70-71 2202-80-71 2202-90-71 2202-01-71 2202-11-71 2202-21-71 3202-10-71 3202-20-71 3202-30-71 3202-40-71 3202-50-71 3202-60-71 3202-70-71 3202-80-71 3202-90-71 3202-01-71 3202-11-71 3202-21-71 4202-10-71 4202-20-71 4202-30-71 4202-40-71 4202-50-71 4202-60-71 4202-70-71 4202-80-71 4202-90-71 4202-01-71 4202-11-71 4202-21-71 5202-10-71 5202-20-71 5202-30-71 5202-40-71 4.9 -2.6 -4.8 Chart IV.18: Foreign Direct Investment Flows a. Gross and Net FDI b. Top Overseas Direct Investment Destinations 100 71.4 71.3 75.1 65.2 50 28.0 11.5 10.1 1.5 0 -29.3 -40.7 -48.9 -44.5 -50 -14.0 -13.0 -16.7 -24.8 -100 Sources: RBI; and Department of Economic Affairs, Ministry of Finance. noillib $SU 32-2202 42-3202 42-3202 )beF-rpA( 52-4202 )beF-rpA( 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Net outward FDI Repatriation/Disinvestment Gross FDI Net FDI eropagniS SU EAU suitiruaM sdnalrehteN KU dnalreztiwS 2022-23 2024-25 (April-February)State of the Economy ARTICLE Chart IV.19: Net Portfolio Investments a. India b. Net FPI Flows: Major EMEs (US$ billion) Notes: 1. Debt also includes investments under the hybrid instruments. 2. *: Data up to April 16, 2025. Sources: National Securities Depository Limited (NSDL); and Institute of International Finance. FPI flows witnessed a turnaround in March 2025 Accounts (NR(E)RA) and Non-Resident Ordinary by recording inflows worth US$ 3.8 billion, driven (NRO) accounts. mostly by the debt segment (US$ 3.6 billion) [Chart On a cumulative basis, external commercial IV.19a]. Equity segment witnessed modest inflows borrowing (ECB) registrations (US$ 50.1 billion) of US$ 0.2 billion in March, reversing the trend of and disbursements (US$ 46.1 billion) during April outflows seen over the previous two months. Debt 2024 - February 2025 were higher than those FPI amounting to US$ 9.4 billion has flowed into recorded during the same period last year by government securities through the Fully Accessible US$8.6 billion and US$13.4 billion, respectively. Route (FAR) in 2024-25.18 Despite outflows in the equity segment during H2:2024-25 on rising risk-off sentiments amidst ongoing global trade uncertainties, net FPI flows remained positive at US$ 1.7 billion during 2024-25 but significantly lower than in the previous year (Chart IV.19b). The flow of non-resident deposits (NRD) witnessed an improvement in Q4:2024-25 compared to the previous quarter for SCBs (excluding Regional Rural Banks) [Chart IV.20]. For 2024-25, net inflows of NRDs remained positive across all sub- components, viz., Foreign Currency Non-Resident (Banks) (FCNR(B)), Non-Resident (External) Rupee 18 Source: https://www.fpi.nsdl.co.in/web/Reports/Yearwise.aspx?RptType=5 RBI Bulletin April 2025 169 noillib $SU 50 China 40 33.8 -90.9 30 1.7 India 41.6 20 2.4 10 3.8 Brazil 17.3 0 -1.0 Malaysia 1.5 -10 -4.3 2.5 -20 South Africa 2.7 -30 3.4 Indonesia 0.6 -100 -50 0 50 Equity Debt Total 2024-25 2023-24 12-0202 22-1202 32-2202 42-3202 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 52-raM *52-rpA Chart IV.20: Quarterly Flows of Components of NRD of SCBs (excluding RRBs) 4000 3000 2000 1000 636656 35 0 -1000 -2000 Note: Data for Q4:2024-25 are provisional. Source: Form A return under Section 42(2) of RBI Act, 1934. noillim $ SU 42-3202:1Q 42-3202:2Q 42-3202:3Q 42-3202:4Q 52-4202:1Q 52-4202:2Q 52-4202:3Q 52-4202:4Q NRE NRO FCNR(B)ARTICLE State of the Economy Chart IV. 21: External Commercial Borrowings - Registrations and Flows 50.1 46.1 Sources: Form ECB, RBI. After adjusting for principal repayment of US$ 25.8 The overall cost of registered ECBs declined by billion, net ECB inflows (US$ 20.3 billion) stood 35 bps during the year, driven by a reduction in both significantly higher during the current financial year the global benchmark interest rates - the secured — more than double the level recorded a year ago overnight financing rate (SOFR) and the weighted (Chart IV.21). average interest margin (WAIM) [Chart IV.23]. Nearly 44 per cent of total ECBs registered during The Indian rupee (INR) appreciated by 0.5 per April 2024-February 2025 were for capital expenditure, cent (m-o-m) during March 2025, supported by FPI including on-lending/sub-lending (Chart IV.22). inflows and year-end dollar receipts from inter- 170 RBI Bulletin April 2025 8.52- 50 40 30 20.3 20 10 0 -10 -20 -30 noillib $SU 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 42 beF-rpA 52 beF-rpA Registrations Gross disbursements Principal repayments Net inflows Chart IV.22: End-use of the Registered ECBs Apr-Feb 25 3.9 7.4 10.8 9.7 18.4 Apr-Feb 24 10.7 11.2 6.6 5.4 7.6 -5 5 15 25 35 45 55 US $ billion Import/ local sourcing of capital goods Modernisation/ new project/infrastructure development On-lending/sub-lending (Capex) Refinancing of ECB/rupee loans Others (including working capital and general corporate purpose) Source: RBI.State of the Economy ARTICLE Chart IV.23: Overall Cost of ECBs 8 6 1.51 4 4.95 2 0 Sources: Form ECB; and RBI staff estimates. company borrowings; however, INR volatility rose As on April 11, 2025, India held foreign exchange driven by elevated global uncertainty (Chart IV.24). reserves worth US$ 677.8 billion, sufficient for about 11 months of imports and 94 per cent of external debt The INR depreciated by 1.0 per cent (m-o-m) in outstanding at end-December 2024 (Chart IV.26a). At terms of the 40-currency real effective exchange rate its current level, India holds the world’s fourth largest (REER) in March 2025 due to depreciation of the INR foreign exchange reserves (Chart IV.26b). in nominal effective terms and widening of India’s inflation differential with its major trading partners India’s current account deficit (CAD) moderated (Chart IV.25). to US$ 11.5 billion (1.1 per cent of GDP) in Q3:2024-25 RBI Bulletin April 2025 171 22-voN 22-ceD 32-naJ 32-beF 32-raM 32-rpA 32-yaM 32-nuJ 32-luJ 32-guA 32-peS 32-tcO 32-voN 32-ceD 42-naJ 42-beF 42-raM 42-rpA 42-yaM 42-nuJ 42-luJ 42-guA 42-peS 42-tcO 42-voN 42-ceD 52-naJ 52-beF 42 beF-rpA 52 beF-rpA Secured overnight financing rate (SOFR) for US dollar Weighted average interest margin )tnec rep ni( nigram dna etar tseretnI Chart IV.24: Movements of the Indian Rupee and Major Currencies against the US Dollar (March 2025 over February 2025) 4 1 2 0 0 -2 -4 -1 Notes: US dollar (DXY) measures the movements of the US dollar against a basket of major currencies (Euro, Japanese yen, British pound, Canadian dollar, Swedish krona, Swiss franc). Sources: FBIL; Thomson Reuters; and RBI staff estimates. tnec reP )YXD( ralloD SU xednI ycnerruC EME laer nailizarB ney esenapaJ dnuop KU thab iahT dnar nacirfA htuoS osep enippilihP oruE osep nacixeM tiggnir naisyalaM nauy esenihC rallod esenawiaT haipur naisenodnI eepur naidnI osep enitnegrA tnec reP Percentage change (+ appreciation/ - depreciation) Volatility (RHS)ARTICLE State of the Economy Chart IV.25: Movements in the 40-Currency Real Effective Exchange Rate a. Monthly Changes b. Decomposition of Monthly Changes 110 4 108 106 2 104 102 101.5 100 0 98 96 -1.0 -2 94 92 90 -4 Source: RBI. from US$ 16.7 billion (1.8 per cent of GDP) in Q2:2024- were driven mainly by outflows in FPI and FDI to 25 but was higher than US$ 10.4 billion (1.1 per cent India. CAD and net capital outflows led to a depletion of GDP) in Q3:2023-24. Robust growth in business, of US$ 37.7 billion in foreign exchange reserves (on a computer, transportation and travel, services exports BoP basis) during Q3 (Chart IV.27). alongside higher remittance receipts cushioned the India’s external debt rose to US$ 717.9 billion effect of a widening merchandise trade deficit. Net (19.1 per cent of GDP) at end-December 2024 from capital outflows of US$ 26.8 billion in Q3:2024-25 US$ 668.8 billion (18.5 per cent of GDP) at end- 172 RBI Bulletin April 2025 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM tnec reP Change in REER (RHS) REER )001 = 61 - 5102( xednI 4 2 -0.3 0 -0.7 -2 -1.0 -4 tnec reP 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM Relative price effect Nominal exchange rate effect Change in REER Chart IV.26: Foreign Exchange Reserves a. India b. Foreign Exchange Reserves (end-March 2025) Notes: 1. *: Data for April 11. 2. The import cover data for December 2024, January, February, and March 2025 is based on annualised merchandise imports for the quarter ending December 2024 as per the balance of payments statistics. 3. Data for Switzerland is for February 2025. Sources: RBI; respective central bank websites; and RBI staff estimates. noillib $SU shtnoM 4000 3500 3000 2500 2000 1500 665.4 1000 500 0 Foreign exchange reserves Import cover (RHS) 8.776 noillib $SU anihC napaJ dnalreztiwS aidnI aissuR ynamreG gnoK gnoH aeroK htuoS eropagniS 750 14 11.2 12 650 10 8 550 6 4 450 2 350 0 32-raM 32-nuJ 32-peS 32-ceD 42-raM 42-nuJ 42-peS 42-ceD 52-naJ 52-beF 52-raM *52-rpAState of the Economy ARTICLE Chart IV.27: India’s Balance of Payments 40 3 2 20 1 0.5 0 0 -1 -1.1 -1.1 -20 -1.0 -0.9 -1.3 -2 -1.8 -40 -3 Sources: RBI. March 2024. Other external vulnerability indicators, to US$ 364.5 billion. While both the foreign assets however, witnessed an improvement during the of Indian residents and India’s foreign liabilities same period, emphasising India’s external sector declined during the quarter, the ratio of international resilience amidst a challenging global environment assets to international liabilities improved to 74.7 per (Chart IV.28). cent in December 2024 from 73.1 per cent a year ago (Chart IV.29). India’s net international investment position (IIP) increased by US$ 11 billion during Q3:2024-25 RBI Bulletin April 2025 173 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2023-24 2024-25 noillib $SU tnec reP Change in reserves on a bop basis (- increase/+ decrease) Current account balance Capital account balance CAB to GDP ratio (RHS) Chart IV.28: India’s External Vulnerability Indicators 60 47.8 44.9 43.4 42.4 40 18.5 19.1 20 6.7 6.6 0 -10.1 -9.8 -20 External debt to Short-term debt Short-term debt Debt service ratio Net IIP to GDP ratio (RM) to total (RM) to GDP ratio debt ratio reserves ratio Note: RM: Residual Maturity. Sources: RBI; and Government of India. tnec reP End-March 2013 End-March 2024 End-June 2024 End-September 2024 End-December 2024ARTICLE State of the Economy Chart IV.29: India's Net IIP and Assets to Liabilities Ratio 1,250 78 1,078.7 1,000 750 76 500 250 74.7 0 74 -250 -500 72 -364.5 -750 -1,000 70 -1,250 -1,500 -1,443.2 -1,750 68 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Source: RBI. Payment Systems with March 2025 marking a continued upward trend, indicating a steady shift in consumer bill payment Digital transactions grew across different through digital platforms. payment modes in March 2025, led by retail UPI remains the cornerstone of India’s digital transactions through the Unified Payments Interface payments landscape, recording the second highest (UPI) and the Bharat Bill Payment System (BBPS) growth among major payment systems with 18.3 [Table IV.4]. Large-value transactions through the billion transactions in March 2025. A significant Real Time Gross Settlement (RTGS) posted a steady share of UPI transactions is spent on shopping, growth in volume and value. BBPS also continued to encompassing both lifestyle-related and essential witness sustained growth in both volume and value, purchases19. Table IV.4 : Growth in Select Payment Systems (y-o-y in per cent) Payment Modes Transaction Volume Transaction Value Feb-24 Feb-25 Mar-24 Mar-25 Feb-24 Feb-25 Mar-24 Mar-25 RTGS 18.8 2.5 12.3 10.3 21.2 10.2 12.4 18.1 NEFT 47.3 11.0 45.2 13.5 25.1 2.0 15.2 12.3 UPI 60.6 33.1 55.3 36.2 47.9 20.2 40.8 25.2 IMPS 19.4 -24.3 16.8 -20.5 21.2 -0.9 16.2 5.2 NACH 13.1 6.8 22.8 12.3 15.6 20.0 15.8 18.4 NETC 12.1 18.7 10.6 11.9 19.2 18.3 17.2 14.5 BBPS 29.8 87.3 25.4 85.7 85.8 240.6 82.8 265.0 Notes: RTGS: Real Time Gross Settlement, NEFT: National Electronic Funds Transfer, UPI: Unified Payments Interface, IMPS: Immediate Payment Service, NACH: National Automated Clearing House, NETC: National Electronic Toll Collection, BBPS: Bharat Bill Payment System. Source: RBI. 19 Perfios & PwC. (2025), How India spends: A deep dive into consumer spending behaviour. Perfios, February. 174 RBI Bulletin April 2025 noillib $SU tnec reP Assets Liabilities Net IIP Assets to liabilities ratio (per cent) (RHS)State of the Economy ARTICLE As part of its continued outreach to the payments countries, although currency pressures could partly and fintech sector, the Reserve Bank observed the 5th offset such benefits. Digital Payments Awareness Week (DPAW) in March India’s strength to withstand these headwinds 2025.20 Held under the theme ‘India Pays Digitally’ and stem from its robust growth fostered by a strong aligned with the ‘Har Payment Digital’ mission, the macroeconomic framework and moderating initiative aimed at enhancing public awareness. In its inflation, with strong domestic engines of growth. Statement on Developmental and Regulatory Policies The agricultural sector in India is poised to sustain of April 9, 2025, the Reserve Bank proposed that its momentum, supported by bumper kharif and National Payments Corporation of India (NPCI) may rabi harvest and higher summer sowing amidst revise UPI transaction limits for Person to Merchant comfortable reservoir position. Risks emanating (P2M) payments, based on evolving user needs. from the rise in temperature above normal levels Certain P2M categories already allow higher limits of and likelihood of heatwaves in the current summer ₹2 lakh and ₹5 lakh. Banks will retain discretion to set season (April - June), however, needs to be monitored. internal limits within NPCI’s framework. Meanwhile, Industrial and services activity continue to remain the Regulatory Sandbox will become ‘Theme Neutral’ resilient. Results of the survey conducted among and ‘On Tap’, enabling continuous testing of eligible representatives from industry associations, including FinTech innovations across categories. several industry bodies, credit rating agencies, and V. Conclusion banks reveal optimism in economic activity supported by moderating inflation, sustained upswing in rural In the near-term, global growth outlook remains consumption and recovery in urban consumption. downcast, as uncertainty surrounding tariffs and the Global uncertainties, however, act as downside risks individual policy responses of different countries to this outlook. could result in lower investments spending, subdued consumer confidence, and a slowdown in global Going forward, India is poised to benefit from trade. The long-term effects of these developments supply chain realignments, diversified FDI sources, on the course of the global economy remain highly and engagement with global investors seeking uncertain as there is still no clarity regarding the scope, resilience and scale, given its already established timing and intensity of tariffs. Going forward, global trade linkages. Moreover, India’s consistent strength financial conditions are likely to remain volatile and in services exports and remittance inflows continues EMEs are vulnerable to feedback loops and spillovers to provide a vital buffer for the current account. which may lead to reigniting of global inflation. Calibrated policy support can help India turn global Decline in global commodity prices, however, could volatility into an opportunity and strengthen its ease pressure on inflation in commodity importing position in the emerging world economic landscape. 20 RBI Press release. March 10, 2025. Digital Payments Awareness Week 2025. RBI Bulletin April 2025 175ARTICLE State of the Economy Annex 1: Major Takeaways from the RBI’s Enterprise Surveys Capacity utilisation (CU) in the manufacturing sector increased by 120 bps while the seasonally adjusted CU increased by 60 bps in Q3:2024-25 (Chart A1). Manufacturers continued to report a positive outlook on CU for the ensuing quarters (Chart A2). Chart A1: Capacity Utilisation in Manufacturing Sector Source: Order Books, Inventories and Capacity Utilisation Survey, RBI. 176 RBI Bulletin April 2025 7.47 3.57 80 75.4 74.2 75 73.8 70 65 60 55 50 45 40 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 tnec reP CU seasonally adjusted CU CU long term average Chart A2: Manufacturers' Assessment and Expectations on Capacity Utilisation 70 50 44.4 45.9 30 18.7 10 17.4 -10 -30 -50 -70 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Source: Industrial Outlook Survey, RBI. )tnec rep( esnopser teN Assessment ExpectationsState of the Economy ARTICLE Manufacturers’ optimism on demand conditions registered a seasonal moderation for Q1:2025-26 but recorded an improvement for the ensuing quarters. Services and infrastructure firms continued to report a more optimistic outlook on demand conditions (Chart A3). Expectations on employment situation evolved largely in sync with the demand conditions (Chart A4). Chart A4: Expectations on Overall Employment Situation 80 69.6 59.2 60 59.3 53.5 40 20 21.6 0 -20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Sources: Industrial Outlook Survey; and Services and Infrastructure Outlook Survey, RBI. RBI Bulletin April 2025 177 )tnec rep( esnopser teN Chart A3: Expectations on Production/Turnover 90 80.0 80 70 74.0 60 50 50.8 40 30 20 10 0 -10 -20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Sources: Industrial Outlook Survey; and Services and Infrastructure Outlook Survey, RBI. Manufacturing Services (full time) Services (part time) Infrastructure (full time) Infrastructure (part time) )tnec rep ( esnopser teN Manufacturing Services InfrastructureARTICLE State of the Economy Firms across the broad sectors remain optimistic about the overall business situation through Q3:2025-26 (Chart A5). Chart A5: Expectations on Overall Business Situation 79.1 90 80 70 74.4 60 50.4 50 40 30 20 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Sources: Industrial Outlook Survey; and Services and Infrastructure Outlook Survey, RBI. Input cost pressures are likely to remain high for the services and the infrastructure sectors during Q1:2025- 26; while the manufacturing sector expects some easing of cost pressures (Chart A6). 178 RBI Bulletin April 2025 )tnec rep( esnopser teN Manufacturing Services Infrastructure Chart A6: Expectations on Input Cost 100 79.2 80 66.4 60 48.5 40 20 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Sources: Industrial Outlook Survey; and Services and Infrastructure Outlook Survey, RBI. )tnec rep( esnopser teN Manufacturing Services InfrastructureState of the Economy ARTICLE Growth of selling prices and profit margins in Q1:2025-26 is likely to moderate for manufacturing enterprises, in line with the softer demand conditions. Services and infrastructure firms, however, expect improved growth in both selling prices and profit margins during the same period (Chart A7). Bankers’ optimism on loan demand moderated during Q1:2025-26 (Chart A8). Chart A8: Senior Loan Officers' Assessment and Expectations on Credit Demand 8 70 6 50 42.6 4 30 2.8 37.5 2 10 0 -10 -2 -30 -4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Source: Banking lending survey, RBI. Note: The ‘net response’ is calculated as the difference between the percentage of respondents reporting optimism and that reporting pessimism. The increase option (I) is an optimistic response for all parameters, except the cost related parameters, such as cost of raw materials, etc., where the decrease option (D) signifies optimism from the viewpoint of a respondent company. RBI Bulletin April 2025 179 )tnec rep( htworg tiderC Assessment Expectations Actual credit growth (Q-o-Q) (RHS) )tnec rep( esnopser teN Chart A7: Expectations on Selling Price 80 70.7 58.8 60 40 23.6 20 0 -20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Source: Industrial Outlook Survey; and Services and Infrastructure Outlook Survey, RBI. )tnec rep( esnopser teN Manufacturing Services InfrastructureThree Years of the Standing Deposit Facility: Some Insights ARTICLE Three Years of the Standing by commercial banks at their own discretion; (ii) open market operations (OMOs) – both outright and Deposit Facility: Some Insights reversible operations through repurchase agreements – that are conducted at the discretion of the central by Avnish Kumar, Priyanka Sachdeva and bank; and (iii) minimum reserve requirements along Indranil Bhattacharyya^ with its maintenance procedure prescribed by the central bank. Marking three years since its introduction, the In the Indian context, the weighted average Standing Deposit Facility (SDF) has been an important call money rate (WACR), which is the rate of the feature of the Reserve Bank of India’s liquidity uncollateralised segment of the money market and management framework, replacing the fixed rate reverse is reflective of liquidity mismatch in the banking repo as the floor of the LAF corridor. This article presents system, is the operating target in the interest rate an assessment of the SDF in India in the overall context corridor framework institutionalised in May 2011 of standing facilities made available by central banks. (RBI, 2011). Under this framework, banks could avail The institution of the SDF is generally in line with liquidity from the central bank at a penal rate above global best practices wherein deposit facilities are in the the policy rate on an overnight basis by pledging form of uncollateralised deposits. The empirical results collateral through the marginal standing facility bear testimony to the importance of liquidity conditions, (MSF) while they could place funds with the central liquidity uncertainty and market microstructure in bank on an overnight basis at a rate below the policy determining the location of the WACR in the LAF rate against collateral under the fixed rate reverse corridor. repo (FRRR). Thus, the interest rates on both these facilities under the liquidity adjustment facility (LAF) Introduction defined the interest rate corridor with the MSF rate Liquidity management operations and practices as the ceiling, the FRRR as the floor and the policy are at the core of the operationalisation of monetary repo rate somewhere in between. This framework policy – “the plumbing in its architecture” (Patra et was operational till April 8, 2022, when the standing al., 2016). In central banking parlance, the operating deposit facility (SDF) replaced the FRRR as the floor procedure of monetary policy refers to the daily of the LAF corridor. Unlike the FRRR, however, the implementation of monetary policy through SDF is an uncollateralised facility which frees the appropriate liquidity management operations. The central bank from collateral encumbrance and thereby operating framework includes the operating target enhances its flexibility in liquidity management. and the instruments that the central bank uses to Once the policy repo rate is announced by manage liquidity conditions in the interbank market the monetary policy committee (MPC), liquidity for bank reserves in pursuance of its objective of management operations are conducted to align the aligning the operating target to the policy rate. These WACR to the policy repo rate. The main liquidity instruments include (i) standing facilities – both management operation is synchronized with lending and deposit facilities – which can be accessed the reserve maintenance cycle. In addition, fine tuning operations are conducted at the discretion ^ The authors are from the Reserve Bank of India. They are grateful to an anonymous referee for comments and Darshan P. Bodhale for data of the Reserve Bank to offset temporary liquidity support. The views expressed in this article are those of the authors and do not represent the views of the Reserve Bank of India. mismatches and stabilise the WACR close to the policy RBI Bulletin April 2025 181ARTICLE Three Years of the Standing Deposit Facility: Some Insights rate. With liquidity management assuming critical developing a liquid inter-bank market. The penal rates importance in monetary policy implementation, the ensure that standing facilities act as a safety valve for operating procedure has undergone major refinements liquidity management (Mohan, 2006). with the institution of the SDF. The interest rates on standing facilities under This article presents an assessment of the the liquidity adjustment facility defines the corridor standing deposit facility in India in the overall context framework. An identical margin on both sides of of standing facilities made available by central banks. the policy rate constitutes a symmetric corridor. A The paper is structured in the following manner: corridor system encourages banks to manage their Section II presents a snapshot of the global practices liquidity buffers more tightly and facilitate greater on standing facilities of central banks followed by a activity in the interbank market. However, it requires discussion of the Indian experience with the SDF in relatively more frequent central bank operations to Section III. The empirical methodology, results and ensure that the money market rates stay close to the their implications are presented in Section IV, with policy rate. A floor system has been the norm for large some concluding observations in Section V. and advanced economies since the global financial crisis (GFC). Under this system, central banks supply II. Central Bank Standing Facilities - Global Practices reserves in abundance through liquidity operations, In terms of permissible variability in the operating and provide a floor for the price of reserves (interest target, the monetary policy operating frameworks can rate) through a deposit facility. The advantage of the be categorised as ceiling, corridor or floor system. floor system is that the central bank can increase the Central banks across the world have generally adopted supply of liquidity to the banking system without either a corridor or a floor system. Cross country pushing short-term money market rates below the key experience suggests that all major central banks have rate (Brandao-Marques and Ratnovski, 2024). Thus, the standing facilities that are available to banks and central bank has two independent tools – the interest other eligible counterparties at their own initiative rate and the amount of liquidity supplied (Chart 1.a). under the conditions specified by the central bank to provide or absorb overnight liquidity (Bindseil, 2014). In a fractional reserve system, however, reserve requirements may check the need for fine-tuning A liquid interbank market and a sound payments liquidity, based on the statutory requirements for and settlement system ensures that market reserve maintenance. If banks are subjected to equilibrium simultaneously leads to equilibrium reserve averaging i.e., they can reduce maintenance to at the individual financial institution level, thus a minimum daily average level over the maintenance minimising recourse to standing facilities. In such a period, the demand curve for bank reserves becomes scenario, a central bank’s lending facility serves just flatter for interest rates near the middle of the corridor as an overdraft facility to fund any end-of-day (Chart 1.b). imbalances with regular access to it discouraged by charging a penal rate higher than the regular Among advanced economies, the European refinancing operation (policy rate). Similarly, the Central Bank (ECB), the Bank of Canada (BoC), Reserve lower interest rate on deposit facility is meant Bank of New Zealand (RBNZ), and Reserve Bank of to disincentivise passive funds deployment with Australia (RBA) were the pioneers of the symmetric the central bank; instead, participants should corridor system around the year 2000. While the ECB do transactions with each other which helps in combined its standing deposit facility with a one- 182 RBI Bulletin April 2025Three Years of the Standing Deposit Facility: Some Insights ARTICLE Chart 1: Operating Procedure of Liquidity Management a. Operating Framework: Corridor vs Floor System b. Corridor System Central Bank Reserves over a Maintenance period O/N interest rate O/N interest rate SLF rate Liquidity supply SLF rate Policy rate Policy rate Liquidity deman d SDF rate SDF rate Central Bank Supply of reserves Minimum supply of Reserves in a Corridor system reserves in a Floor system Central Bank Reserves Source: Adapted from Brandao-Marques and Ratnovski (2024). Source: Adapted from Bernhardsen and Kloster (2010). month reserve maintenance period, the other three In the recent period, however, the BoC, the Bank central banks operated without reserve averaging of England (BoE), the ECB, and the RBA have all (Whitesell, 2006). The Norges Bank implemented announced plans to reduce reserves until borrowing monetary policy through a relatively pure version of a from the central bank picks up and market rates are floor system until October 2011; thereafter, it shifted marginally above the interest rate paid by the central to a quota-based system – a compromise between a bank on deposits, essentially returning to a corridor floor system and a corridor system1. Central banks system, although they do not refer to it as the “corridor” (Nelson, 2024). The new ‘soft’ floor framework with like the Bank of Canada (BoC) and the Reserve Bank a narrower spread can be characterised as a hybrid of New Zealand (RBNZ) adopted the floor system in system, combining the smallest possible central bank 2020. In the case of the US, the deposit facility takes balance sheet with both structural and fine-tuning the form of a remuneration of excess reserves, which operations. Its main objective is to allow for effective is equivalent to a deposit facility with automatic control of short-term money market rates in transition transfer of excess reserves to it. The US Fed uses two from a situation of abundant excess liquidity to one of rates to establish the floor of the overnight interest less ample liquidity (Höflmayr and Kläffling, 2024). To rate. One is the interest on reserve balances, which avoid high volatility in the short-term money market is the rate paid on reserve balances of banks or other rate, the hybrid system complements the deposit eligible counterparties. The other is the rate on the facility with a standing lending facility or frequent overnight reverse repo facility that is offered to a fixed-rate full-allotment lending operations priced at broad range of financial institutions (Afonso et al., or slightly above the deposit facility rate, capping the 2023). money market interest rate from above and thereby making the framework a zero-width or near-zero- 1 Under the new system, only a certain amount of each bank’s deposits with the central bank – a quota – is remunerated at the key policy rate. width corridor. The RBA has endorsed a plan to move Deposits in excess of the quota are remunerated at a lower rate, the reserve rate. to ample reserves system in which banks’ demands for RBI Bulletin April 2025 183ARTICLE Three Years of the Standing Deposit Facility: Some Insights reserves are satisfied via open market repo operations be introduced as the floor for absorption of surplus at a price near the cash rate target, in what are known liquidity from the system but without the need for as full allotment auctions. Together with the floor providing collateral in exchange, with the discretion provided by the exchange settlement (ES) rate, these to set the interest rate without reference to the policy operations should keep the cash rate close to target2. target rate. The SDF was also proposed to be used for sterilisation operations as it will not require the Historically, central banks used only liquidity provision of collateral for absorption – which may be providing facility – either a discount or an advance a binding constraint on the reverse repo facility in the facility. Central banks, however, started to introduce face of sustained surge in capital flows (RBI, 2014). liquidity absorbing facilities in late 1990s (Bindseil The withdrawal of ₹500 and ₹1000 denomination and Jablecki, 2011). Central banks generally lend currency notes from circulation in 2016 and the to financial institutions through collateralised resultant liquidity glut also demonstrated collateral transactions, i.e., repurchase agreements to protect constraints associated with conventional instruments themselves from credit risk and ensure equal warranting introduction of unconventional measures treatment of counterparties (Chailloux et al., 2008). like imposition of incremental cash reserve ratio While lending to counterparties, the central bank (CRR) of 100 per cent on the increase in net demand is clear about the extent of risk it is willing to be and time liabilities (NDTL) and issuance of bonds exposed to by specifying (i) the securities it is willing under the market stabilisation scheme (MSS) to drain to accept as collateral; and (ii) the haircut/margin large surplus liquidity from the banking system. In it would charge on these securities. This practice the absence of such options, there is the risk of the protects the quality of the central bank’s balance inter-bank rates dropping to near zero levels amidst sheet besides fostering financial discipline. Deposit abundant liquidity, posing risks to financial stability. facilities, on the other hand, are generally in the form of unsecured deposits (Annex Table 1). Being the The amendment to Section 17 of the RBI Act in monopoly supplier of bank reserves; central banks 20183 enabled the Reserve Bank to institutionalise never face a situation where it defaults – thus, banks the SDF. The SDF was introduced in April 2022 and do not have any counterparty risk while depositing replaced the FRRR as the floor of the LAF corridor. funds with the central bank. A central bank, however, With the institution of the SDF, the FRRR, retained at may choose to provide security as collateral through 3.35 per cent, was delinked from the policy repo rate sale or reverse repurchase agreements for creating a although it remains a part of the Reserve Bank’s toolkit market for securities (Rule, 2012). and can be used at its discretion. The SDF rate, which is applicable on uncollateralised overnight deposits, III. Standing Deposit Facility in India was set at 25 basis points (bps) below the policy repo In the Indian context, the standing deposit rate. This, along with the MSF rate at 25 bps above the facility (SDF) was first recommended in the report of repo rate, restored the width of the LAF corridor to its the Expert Committee to Revise and Strengthen the pre-pandemic level of 50 bps. Thus, standing facilities Monetary Policy Framework (Chairman: Dr. Urjit R. were instituted at both ends of the LAF corridor – one Patel, 2014) as part of the overhaul of the operating to absorb and the other to inject liquidity, rendering framework of monetary policy. The committee the operating framework symmetric. Furthermore, recommended that a (low) remunerated SDF may 3 The Union Budget 2018-19 had proposed an amendment to Section 17 of the RBI Act, 1934 which allowed the Reserve Bank of India to accept “money 2 Christopher Kent (2024), ‘The Future System for Monetary Policy as deposits, repayable with interest, from banks or any other person under Implementation’, Bloomberg Australia Briefing. Speech Retrieved from the Standing Deposit Facility Scheme, as approved by the Central Board, https://www.rba.gov.au/speeches/2024/sp-ag-2024-04-02.html from time to time, for the purposes of liquidity management. 184 RBI Bulletin April 2025Three Years of the Standing Deposit Facility: Some Insights ARTICLE access to SDF and MSF are at the discretion of banks, reverse repo (VRRR) fine tuning operations of various unlike repurchase transactions, outright OMOs sizes and tenors. The liquidity glut and the required and CRR, which are conducted at the discretion of normalisation thereafter provided an opportune time the Reserve Bank. In addition, the RBI retains the for the introduction of the SDF in April 2022. Since flexibility to absorb liquidity for longer tenors under then, surplus liquidity has been largely mopped up the SDF with appropriate pricing, as and when the need through the SDF with declining share of absorptions arises. By removing the binding collateral constraint through VRRR operations. Surplus liquidity conditions that could have inhibited the central bank’s liquidity abated in 2022-23 in sync with the change in monetary management operations, the SDF has strengthened policy stance to withdrawal of accommodation. Taking the operating framework of monetary policy. It also cognisance of banks’ higher recourse to the MSF while acts as a financial stability tool by providing a floor to simultaneously parking large surplus funds under the overnight inter-bank market rates. The institution of SDF, reversal of liquidity facilities under both the the SDF is generally in line with global best practices SDF and the MSF was allowed even during weekends wherein deposit facilities are in the form of unsecured and holidays, effective December 30, 2023, which deposits. provided banks greater flexibility in their operations. Of the average liquidity absorption of ₹1.7 lakh crore In the aftermath of COVID-19, the Reserve Bank since April 2022 and up to March 2025, nearly 65 per injected substantial liquidity into the banking system cent was through the SDF while the remaining was through both conventional and unconventional mopped up through VRRR auctions as compared to policy measures to mitigate the adverse impact of only 16 per cent absorbed under the FRRR during the pandemic on the real economy. The surplus was April 7, 2017 to March 20, 2020 (Chart 2). mopped up entirely through overnight FRRRs during March 2020 to January 2021. Subsequently, as normal The simultaneous occurrence of liquidity deficit liquidity operations resumed in January 2021, the bulk conditions alongside substantial fund placements of surplus liquidity was absorbed through variable rate under the SDF suggests asymmetric distribution Chart 2: Liquidity Operations 13.0 11.0 9.0 7.0 5.0 3.0 1.0 -1.0 -3.0 -5.0 Source: Reserve Bank of India (RBI). RBI Bulletin April 2025 185 erorc hkal ₹ 71-rpA-6 71-nuJ-62 71-peS-51 71-ceD-5 81-beF-42 81-yaM-61 81-guA-5 81-tcO-52 91-naJ-41 91-rpA-5 91-nuJ-52 91-peS-41 91-ceD-4 02-beF-32 02-yaM-41 02-guA-3 02-tcO-32 12-naJ-21 12-rpA-3 12-nuJ-32 12-peS-21 12-ceD-2 22-beF-12 22-yaM-31 22-guA-2 22-tcO-22 32-naJ-11 32-rpA-2 32-nuJ-22 32-peS-11 32-ceD-1 42-beF-02 42-yaM-11 42-luJ-13 42-tcO-02 52-naJ-9 52-raM-13 Daily SDF Fixed rate reverse repo Variable rate reverse repo MSF Variable rate repo Total absorption Total injection through repo Net LAF surplus(+)/deficit(-)ARTICLE Three Years of the Standing Deposit Facility: Some Insights Chart 3: Liquidity Demand and SDF Holdings Source: RBI. of liquidity within the banking system and the period. The liquidity glut due to COVID-19 related increased liquidity preference of banks (Chart 3). The measures along with large capital inflows pushed increase in the share of SDF balances as a proportion the WACR below the FRRR (floor of the corridor) as of total absorption by the Reserve Bank reflects the reflected in the large negative spread of the WACR increase in the precautionary demand for funds by vis-à-vis the FRRR. This negative spread persisted banks. In the backdrop of the need for higher liquidity after the implementation of the SDF during April insurance in view of 24/7/365 payment systems, banks to August 2022 with July 2022 being the exception. are facing uncertainty in their day-to-day transactions Subsequently, the WACR gradually moved above the as high value transactions at late hours can result in SDF rate (Chart 4). shortfall in reserve maintenance. Moreover, the Just Market microstructure and regulatory in Time release of funds from the treasury to the end prescriptions, apart from system liquidity and beneficiary have considerably shrunk the float money corridor width, determine the level of the WACR and that were available with banks earlier. Thus, banks its variability. The skewed distribution of liquidity increasingly prefer to hold larger balances on a daily across banks may encourage arbitrage opportunities basis in recent years, which coincide with the SDF which may result in the hardening of WACR and phase. This has also resulted in banks showing less widening of the spread. Furthermore, the regulatory inclination in parking surplus funds with the central developments regarding the Reserve Bank’s directive bank through VRRR operations of longer tenors under to all eligible call money participants (including the LAF. cooperative banks) to obtain the Negotiated Dealing The standing facility is a primary tool used by System-Call (NDS-Call) membership has resulted central banks to control the level and volatility of the in migration of participants towards the NDS-Call operating target. Since the formal adoption of flexible platform – thus increasing traded deals. Call money inflation targeting (FIT), the WACR largely traded market transactions were either traded on the NDS- above the floor of the corridor barring the COVID Call or are reported on NDS-Call after being traded 186 RBI Bulletin April 2025 erorc hkal ₹ 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 22-rpA-8 22-nuJ-11 22-guA-41 22-tcO-71 22-ceD-02 32-beF-22 32-rpA-72 32-nuJ-03 32-peS-2 32-voN-5 42-naJ-8 42-raM-21 42-yaM-51 42-luJ-81 42-peS-02 42-voN-32 52-naJ-62 52-raM-13 Total Injection through Repos and MSF SDF holdingsThree Years of the Standing Deposit Facility: Some Insights ARTICLE over the counter (OTC). The share of traded volume technology (IT) infrastructure to access the NDS-Call which had declined during 2020-22 has gradually – usually extended loans bilaterally towards the close increased since then with all transactions taking place of market hours at lower rates. in the traded segment since October 2023 (Chart 5). Moreover, the restoration and harmonisation of Earlier, the WACR was pulled down disproportionately market timing in the call money market removed because of the lower rate on reported deals as small cooperative banks – principal lenders in reported the market anomaly which reduced reported deals deals and who did not have the requisite information and increased traded deals. The trading hours for Chart 5: Traded vs. Reported Deals in Call Money Market Sources: RBI; and CCIL. RBI Bulletin April 2025 187 erahS erorc ₹ 100% 45000 90% 40000 80% 35000 70% 30000 60% 25000 50% 20000 40% 15000 30% 20% 10000 10% 5000 0% 0 7102-40-60 7102-70-60 7102-01-50 8102-10-40 8102-40-50 8102-70-50 8102-01-40 9102-10-30 9102-40-40 9102-70-40 9102-01-30 0202-10-20 0202-40-20 0202-70-20 0202-01-10 0202-21-13 1202-40-10 1202-70-10 1202-90-03 1202-21-03 2202-30-13 2202-60-03 2202-90-92 2202-21-92 3202-30-03 3202-60-92 3202-90-82 3202-21-82 4202-30-82 4202-60-72 4202-90-62 4202-21-62 5202-30-72 Chart 4: WACR Spread Sources: Clearing Corporation of India Ltd. (CCIL); and RBI. Volume-Traded Volume-Reported Total_volume (RHS) tnec reP tnec reP 7.5 1.3 7.0 1.1 6.5 0.9 6.0 0.7 5.5 0.5 5.0 0.3 4.5 0.1 4.0 -0.1 3.5 3.0 -0.3 2.5 -0.5 71-rpA-70 71-luJ-02 71-voN-10 81-beF-31 81-yaM-82 81-peS-90 81-ceD-22 91-rpA-50 91-luJ-81 91-tcO-03 02-beF-11 02-yaM-52 02-peS-60 02-ceD-91 12-rpA-20 12-luJ-51 12-tcO-72 22-beF-80 22-yaM-32 22-peS-40 22-ceD-71 32-raM-13 32-luJ-31 32-tcO-52 42-beF-60 42-yaM-02 42-peS-10 42-ceD-41 52-raM-82 Covid Period FRRR Period SDF Period WACR over Floor (RHS) Reverse repo rate WACR Repo rate SDF rateARTICLE Three Years of the Standing Deposit Facility: Some Insights various markets regulated by the Reserve Bank were operations are targeted to address transient/frictional amended with effect from April 7, 2020 in view of liquidity mismatches in the system. During systemic the operational dislocations and elevated levels of liquidity deficit, banks with adequate collateral health risks posed by COVID-19. During the period can avail liquidity from the Reserve Bank. On the of liquidity glut, banks could borrow funds from contrary, easy liquidity condition results in lower cooperative banks at ultra-low rates and park them recourse to liquidity from the Reserve Bank. Positive at higher rates under the FRRR/SDF window. The net LAF to NDTL implies surplus liquidity within the Reserve Bank restored market hours in a phased banking system and vice versa. An increase in this manner commencing November 20204. ratio would reduce the WACR and its spread over the SDF rate. Liquidity distribution is another important IV. Empirical Analysis factor as a skewed distribution of liquidity is likely to As alluded to earlier, several factors are at play in result in higher dependence on the call money market determining the level of WACR, and thus its spread from a systemic perspective. As such, an increase in over the floor of the LAF corridor. This section demand for call money relative to the total overnight attempts to assess the determinants of WACR spread money market volume would exert upward pressure over the SDF, based on daily data during the period on the WACR and widen its spread over the SDF rate. April 8, 2022 to March 28, 2025, benchmarking it to In this exercise, liquidity distribution is proxied by the FRRR period with similar attribute of corridor the ratio of uncollateralised interbank call money width (50 bps), i.e., April 6, 2017 to March 20, 2020.5 market volume as a proportion of the total volume of An empirical analysis is undertaken to investigate the overnight money market. Liquidity uncertainty, the determinants of the spread of the call rate over captured as the square of mean deviation of net the floor of the LAF corridor under the two regimes, LAF during the SDF period, firms up the WACR thus which is conditioned by factors influencing liquidity increasing its spread over the SDF rate. The share of as well as elements of market microstructure. Based traded to total deals is also expected to positively on existing literature (Kumar, et al., 2017; Prabu and impact the spread as discussed earlier. The summary Bhattacharyya, 2023), liquidity conditions (LIQ_ statistics of the selected variables for both the sample Cond), liquidity distribution (LIQ_Dist) and liquidity periods are presented in Annex Table 2. uncertainty (LIQ_Unc), along with the proportion At the outset, scatter plots are presented for a of traded to total deals in uncollateralised market preliminary evaluation of the relationship between (TRDtoTot) were included as independent variables. the dependent and the explanatory variables. Scatter Liquidity condition is defined as the daily net plots show that the spread of WACR is negatively LAF position6 as a proportion of net demand and correlated with the liquidity conditions during both time liabilities (NDTL) of the banking system. LAF the SDF as well as the FRRR period, while traded to total deals and liquidity uncertainty are positively 4 RBI Press Release dated February 8, 2023 on RBI Extends Market Trading Hours; https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=55180 correlated. The correlation between WACR spread 5 In empirical analysis, the sample for FRRR period does not include and liquidity distribution is, however, ambiguous period after March 20, 2020 because of the liquidity glut caused by (Chart 6). the Covid-19 induced stimulus through various conventional and unconventional measures. Excluding the Covid period from the sample also takes care of fixed width corridor for both time periods considered The WACR, and thus its spread, exhibits high for empirical analysis. volatility persistence (Singh, 2020). An autoregressive 6 Defined as total absorption of liquidity through VRRR and SDF, net of injections through repo and MSF. conditional heteroscedasticity (ARCH) model 188 RBI Bulletin April 2025Three Years of the Standing Deposit Facility: Some Insights ARTICLE Chart 6: Relationship between WACR Spread (over LAF floor) and Explanatory Variables a. Spread and Liquidity Condition b. Spread and Liquidity Distribution Source: Authors’ estimation. (Engle and Bollerslev, 1986) is estimated to analyse also included in the variance equation. The model is the determinants of spread7. Apart from a mean specified below and the results are presented in Table equation, the ARCH model has a variance equation 1 and Table 2. ( ) which is expressed as a function of the weighted Mean Equation average of its past squared error term, i.e., the ARCH term ( ) and the past conditional variance term ( ). The coefficients in the variance equation can be interpreted as the autocorrelation factor (θ) and volatility persistence (θ φ)) factor. Controlling for Variance Equation the variables discussed earlier, the mean and variance + equations are estimated in an ARCH framework for the SDF and the FRRR period using the maximum likelihood method. Policy repo rate (Repo) is included From Table 1, it is noted that liquidity conditions t in the variance equation to see the impact of policy have a negative and significant impact on the spread announcement on variability in spread. LIQ_Unct is of WACR (over the SDF rate) during the sample period, i.e., surplus liquidity in the banking system softens the 7 ARCH models allow the variance to change over time and are often used to characterise short but highly volatile periods. interbank call rate, thereby, compressing the spread. RBI Bulletin April 2025 189 )tnec rep( roolF revo daerpS RCAW c. Spread and Traded Deals d. Spread and Liquidity Uncertainty )tnec rep( roolF revo daerpS RCAW )tnec rep( roolF revo daerpS RCAW )tnec rep( roolF revo daerpS RCAW 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0.0 0.0 -2.0-1.6-1.2-0.8-0.40.0 0.4 0.8 1.2 1.6 2.0 2.4 2.8 3.2 3.6 4.0 4.4 4.8 -0.2 0 2 4 6 8 10 12 14 16 18 20 -0.2 -0.4 -0.4 -0.6 -0.6 Liquidity Distribution (per cent) Liq Conditions (Net LAF as proportion of NDTL) Fixed Rate Reverse Repo Period Standing Deposit Facility Period Fixed Rate Reverse Repo Period Standing Deposit Facility Period 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0.0 0.0 -0.20.0 0.2 0.4 0.6 0.8 1.0 -0.2 0 1 2 3 4 5 6 7 8 9 10 -0.4 -0.4 -0.6 -0.6 Traded volume to Total volume in call money market Liquidity Uncertainty Fixed Rate Reverse Repo Period Standing Deposit Facility Period Fixed Rate Reverse Repo Period Standing Deposit Facility PeriodARTICLE Three Years of the Standing Deposit Facility: Some Insights Table 1: Factors impacting Spread during Table 2: Factors impacting Spread during SDF Period FRRR Period Dependent Variable: Spread (WACR over SDF Rate) Dependent Variable: Spread (WACR over Fixed Rate Reverse Repo) Mean Equation Variance Equation Mean Equation Variance Equation Explanatory Variables Explanatory Variables Spread (-1) 0.770*** C -0.009*** Spread (-1) 0.609*** C -0.002 Liquidity Conditions -0.027*** RESID(-1)2 0.825*** Liquidity Conditions -0.007*** RESID(-1)2 0.342*** Traded to Total Volume 0.044*** Repo 0.002*** Traded to Total Volume -0.008 Repo 0.001*** Liquidity Distribution 0.011*** Liquidity 0.001*** Liquidity Distribution 0.007*** Liquidity 0.001*** Uncertainty Uncertainty Liquidity Uncertainty 0.007*** Liquidity Uncertainty -0.002 Diagnostics Diagnostics ARCH LM (6) (p-value) 0.99 ARCH LM (6) (p-value) 0.99 Q (6) (p-value) 0.67 Q (6) (p-value) 0.17 Adjusted R2 0.75 Adjusted R2 0.47 Note: ‘***’, ‘**’ and ‘*’ indicate the significance at 1, 5 and 10 per cent, Note: ‘***’, ‘**’ and ‘*’ indicate the significance at 1, 5 and 10 per cent, respectively. respectively. Source: Authors’ estimates. Source: Authors’ estimates. The positive coefficient of liquidity distribution and the SDF. During the FRRR period, banks had access to liquidity uncertainty are also on expected lines – a the fixed rate repo up to 0.25 per cent of their own net more skewed distribution and greater uncertainty demand and time liabilities (NDTL) on a daily basis firms up the WACR thereby increasing the spread. and up to 0.75 per cent of the banking system NDTL The positive relationship between WACR spread and through four 14-day variable rate term repo auctions liquidity distribution reflects the lack of depth in conducted during the reserve maintenance fortnight, the call money market where few players often drive which provided an amount of assured liquidity. market dynamics (Kumar et al., 2017). An increase Thus, the impact of liquidity uncertainty on the level in share of traded deals is also associated with an of spread was not significant during this period. increase in spread for reasons alluded to earlier. However, liquidity uncertainty is found to have a Since the interbank overnight market is characterised significant positive impact on variability of spread. by volatility clustering, lagged spread indicating Similar to SDF, policy announcement is also found to have a positive and statistically significant impact on persistence is positively related to the spread. Results spread during the FRRR period. from the variance equation suggest that liquidity uncertainty increases volatility of the spread while V. Conclusion policy announcement has positive and significant The introduction of the SDF represents a impact on spread. paradigm shift in monetary policy implementation As evident from Table 2, the signs of the in the Indian context. It allows the central bank coefficients for lagged spread, liquidity conditions greater flexibility in liquidity management without and liquidity distribution in the mean equation of the being hamstrung by collateral availability – a fact FRRR period is similar to that under the SDF period. noted earlier during periods of exceptional liquidity The impact of traded deals and liquidity uncertainty glut. Moreover, the SDF provides the flexibility to is not found to be significant under FRRR unlike in absorb liquidity over longer tenors with appropriate 190 RBI Bulletin April 2025Three Years of the Standing Deposit Facility: Some Insights ARTICLE pricing. Thus, sterilisation of excess liquidity can be Brandao-Marques L., and L. Ratnovski (2024): conducted without triggering further inflows, which is The ECB’s Future Monetary Policy Operational likely through repeated OMO sales that keep interest Framework - Corridor or Floor? IMF Working rates elevated and maintains the interest rate PaperWP/24/56, March. differential. Chailloux, A., Gray, S., & McCaughrin, R. (2008). Central The empirical results bear testimony to the Bank collateral frameworks: Principles and policies. importance of liquidity conditions, liquidity International Monetary Fund Working Paper No. 222. uncertainty and liquidity distribution in determining Engle, R.F. and T. Bollerslev, (1986), “Modelling the the WACR and its spread, which is corroborated by Persistence of Conditional Variance”, Econometric recent developments in the overnight inter-bank Reviews, 5, 1-50. money market. The results also provide evidence Höflmayr M., and D. Kläffling (2024): A new about the efficacy of the regulatory initiatives of the operational framework for the European Central Reserve Bank in migrating cooperative banks to the Bank, European Parliamentary Research Service, May. NDS-Call platform that has ameliorated the distortions Kumar, S., Prakash, A., & Kushawaha, K. M. (2017). in the pricing of WACR witnessed earlier. In addition, What explains call money rate spread in India? RBI introduction of daily VRR since mid-Jnauary 2025 has Working Paper Series: 07/2017. reduced liquidity uncertainty. Such refinements in market microstructure and the operating procedure Mohan, R., (2006). Coping with Liquidity Management of monetary policy on a continuous basis is indeed in India: A Practitioner’s View. RBI Bulletin, April. essential to facilitate signal extraction from market Nelson, B. (2024). From the Floor Back to the Corridor: dynamics and the pricing of financial market Why the Choice of Monetary Policy Implementation instruments. Framework Matters? Bank Policy Institute Blog, References: September 30. https://https://bpi.com/from-the-floor- back-to-the-corridor-why-the-choice-of-monetary- Afonso, G., Cipriani, M., Spada, G. L. & Prastakos, P. policy-implementation-framework-matters/ (2023). “The Federal Reserve’s Two Key Rates: Similar but Not the Same?,” Liberty Street Economics 20230814, Patra M.D., Kapur M., Kavediya R., & Lokare, S.M. Federal Reserve Bank of New York. (2016). Liquidity Management and Monetary Policy: From Corridor Play to Marksmanship in Ghate C.& Bernhardsen, T., & Kloster, A. (2010). Liquidity Kletzer K. (eds) Monetary Policy in India, Springer, management system: Floor or corridor. Norges Bank New Delhi, 257-296. Staff Memo No 4 Prabu, E. and Bhattacharyya, I. (2023). Regime- Bindseil, U. and Jablecki, J. (2011), “The Optimal Width Dependent Determinants of the Uncollateralised of the Central Bank Standing Facilities Corridor and Overnight Rate: The Interplay of Operating Procedure Banks’ day-to-day Liquidity Management and Market Microstructure. RBI Working Paper Series, Bindseil, U. (2014). Monetary Policy Operations and WPS(DEPR):07/2023. the Financial System, Oxford University Press. Reserve Bank of India (2014). Report of the Expert BIS (2022). MC Compendium, Monetary policy Committee to Revise and Strengthen the Monetary frameworks and central bank market operations. Policy Framework, January. RBI Bulletin April 2025 191ARTICLE Three Years of the Standing Deposit Facility: Some Insights Reserve Bank of India (2011). Report of the Working Singh, B. (2020). Liquidity Shocks and Overnight Interest Rates in Emerging Markets: Evidence from Group on Operating Procedure of Monetary Policy GARCH Models for India. RBI Working Paper Series, (Chairman: Deepak Mohanty), March. WPS(DEPR):06/2020. Rule, G. (2012).”Collateral management in central bank Whitesell, W. (2006). Interest Rate Corridors and policy operations,” Handbooks, Centre for Central Reserves. Journal of Monetary Economics.53, 1177- Banking Studies, Bank of England, number 31, April. 1195. 192 RBI Bulletin April 2025Three Years of the Standing Deposit Facility: Some Insights ARTICLE Annex Table 1: Standing Deposit Facilities: Cross Country Countries Name Form Pricing method Access limited by/to Australia Exchange Settlement RBA Deposit Rate Cash target rate – 10 bps Exchange settlement account eligibility Account Brazil Standing facility Reverse repo Base Selic rate – 35 bps Financial institutions that are primary dealers; eligible collateral Canada Deposit facility Deposit Fixed at lower limit of the Participants in the LVTS operating band; payment system Euro system Deposit facility Deposit Fixed rate No limit India Standing deposit facility Uncollateralised Policy Rate - 25bps SCBs; select UCBs, RRBs, select SSCBs deposit and Primary Dealers Indonesia Deposit facility Deposit Policy Rate - 75bps Banks registered as participants in monetary operations Korea Liquidity adjustment Deposit Base rate – 50bps Reserve depository institutions deposits Malaysia Standing facility Deposit OPR - 25bps Financial institutions that are interbank participants Mexico Standing facility Deposit Not remunerated Commercial and development banks New Zealand Standing facility Deposit Fixed below Official cash rate Commercial banks and Fis Norway Standing facility Excess Reserve Remunerated Commercial Banks, Settlement Banks and specialised financial institutions Philippines Deposit Facility Overnight Deposit Fixed rate Banks, NBQBs, and Trust entities Singapore Standing facility Deposit Reference rate less 50bp, floored MEPS+ participating banks at 0 per cent South Africa Standing facility reverse Automatic end of day Repo less 100 bps Clearing banks repo square off facility Sweden Standing facility Deposit Repo rate minus 10 bps Monetary policy counterparties and some participants in the Riksbank’s payment system RIX Thailand End-of-day Deposit Facility Deposit Policy rate minus 50bp Banks, finance companies, specialised financial institutions and other juristic persons permitted by BOT United Kingdom Operational Standing Deposit Bank Rate minus 25bp Banks, building societies, CCPs and Deposit Facility broker dealers, unlimited size United States Standing facility Interest on Reserve As of March 2025, 440 bps Depository institutions balances Sources: BIS; and Central Bank websites. RBI Bulletin April 2025 193ARTICLE Three Years of the Standing Deposit Facility: Some Insights Table 2: Summary Statistics SPREAD Liquidity Conditions Liquidity Distribution Traded to Total Deals (WACR – Floor) FRRR SDF FRRR SDF FRRR SDF FRRR SDF Mean 0.15 0.28 0.82 0.34 8.32 2.23 0.67 0.91 Median 0.14 0.29 0.48 0.25 7.92 2.19 0.71 0.99 Maximum 1.02 1.16 4.27 4.46 29.83 3.76 0.94 1.0 Minimum -0.15 -0.48 -1.50 -1.65 3.02 0.17 0.08 0.23 Std. Dev. 0.09 0.20 1.28 0.99 2.76 0.40 0.13 0.15 Skewness 2.11 -0.33 0.51 1.24 1.40 0.22 -0.73 -1.91 Kurtosis 19.7 3.53 2.27 5.70 8.77 4.37 3.27 5.7 Observations 712 721 712 721 712 721 712 721 Note: FRRR period covers April 6, 2017 to March 20, 2020; SDF period covers April 8, 2022 to March 28, 2025. Source: Authors’ estimates. 194 RBI Bulletin April 2025Changing Dynamics of Climate Policy Uncertainty and Energy Commodity Prices ARTICLE Changing Dynamics of Climate prices are intricately intertwined with uncertainties related to climate policy changes. In light of the Policy Uncertainty and Energy aforementioned interlinkages, this paper analyses the Commodity Prices impact of climate policy uncertainty on global energy prices and relatedly, on the ramifications of these by Satadru Das and Vidya Kamate^ dynamics for domestic inflation in India. The relationship between climate change and This article analyses the evolving relationship energy prices could be either positive or negative. between climate change measured using Climate Policy Climate regulation induced uncertainty has been Uncertainty (CPU) index developed by Gavriilidis found to be positively related to firm investment (2021) and global energy commodity prices, and its in green energy driven by its desire to diminish its implication for India’s domestic inflation. Statistical carbon footprint (Rodriguez Lopez et al., 2017). tests using monthly data indicate that the relationship Investors move away from brown firms and switch between CPU index and global energy commodity prices to green firms in response to rising climate change underwent a structural break around March 2017. worries which leads to underperformance of brown stocks vis-à-vis green stocks (Pástor et al., 2021, Bouri While before March 2017, the relationship between the et al., 2022). In contrast, the real options approach to two variables was positive, it has since been negative. investment decisions under uncertainty dictates the Empirical analysis using a Local Linear Projection agents to postpone their investments by increasing (LLP) framework suggests that this change in dynamics the option value of waiting to invest (Bernanke, 1983; between CPU and energy commodity prices has led to Dixit et al., 1994). A number of studies have found a countercyclical pass-through of global climate policy empirical evidence of such investment postponement uncertainty to domestic prices in India in recent years. in green or low carbon technologies (Fuss et al., 2009; Introduction Blyth et al., 2007; Kettunen et al., 2011). The two opposing views with one arguing that uncertainty Traditional sources of energy such as fossil fuels discourages firms from investing, while other have contributed to global economic expansion. The suggesting that uncertainty encourages investment simultaneous adverse environmental consequences may have opposing implications for prices of energy of continued fossil fuel usage have resulted in commodities and therefore, calls for further empirical global policy concern towards the climate change analysis. Climate transition risk related policies are phenomenon. Since the signing of the Paris Agreement likely to affect energy prices. Inflationary pressures in 2016 aiming to limit the increase of global can arise from the impact of climate policy uncertainty temperature to well under 2 degree Celsius, a growing on investment demand and inflation expectations number of countries are drawing up roadmaps for (Adediran et al., 2023). Physical risks related to voluntary emission reductions and other development climate change can increase inflation volatility strategies to attain the vision of “net zero emissions”. regarding food, housing and energy prices which can Therefore, global energy usage and energy commodity have heterogenous effects on inflation (RBI, 2023). ^ The authors are from the Department of Economic and Policy Research Therefore, it becomes important to analyse the pass- (DEPR). The authors would like to thank Muneesh Kapur, Saurabh Ghosh and Harendra Kumar Behera for their guidance. The views expressed in through of energy price changes caused by climate this article are those of the authors and do not represent the views of the Reserve Bank of India. policy uncertainty to domestic inflation. RBI Bulletin April 2025 195ARTICLE Changing Dynamics of Climate Policy Uncertainty and Energy Commodity Prices With this backdrop, the rest of the article is overcome this challenge, Gavriilidis (2021) developed organised as follows. Section II provides a brief a Climate Policy Uncertainty (CPU) index. The CPU overview of the literature analysing the relationship index not only accounts for the outlook change on between climate change policy and energy prices. climate but also provides signals relating to transition Section III presents a detailed description of the choice risks to the energy sector. There is a growing literature of data and variables used in the analysis. Section IV analysing the relationship of the index with various and V discuss the methodology and main empirical economic indicators. Bouri et al. (2022) find that results obtained in the paper. Section VI concludes difference in performance of green versus brown with some key takeaways and policy suggestions. energy stocks is driven by climate policy uncertainty. Treepongkaruna et al. (2023) show that the risk- II. Literature Review adjusted future returns of stocks with low exposure Extant literature has analysed various aspects to CPU are higher than those with high CPU exposure of the relationship between climate change and oil and thus provide evidence of CPU being priced industry. Climate change policies have the potential in cross-section of individual stocks. He and Yang to alter the risk premiums for oil sector through their (2022) find strong in and out of sample stock market impact on transition risks and relative costs of crude predictability of oil industry using CPU index. Ren et oil usage and renewable energy consumption (Diaz- al. (2022) analyse the bidirectional causality between Rainey et al., 2021). Fossil fuel firms face relatively CPU and traditional energy and green energy markets. larger bank borrowing costs as compared to non- Zhou et al. (2023) developed a time varying parameter fossil fuel firms due to higher uncertainty (Delis vector autoregressive model with stochastic volatility et al., 2019). The financial market impact of climate (TVP-SV-VAR) to investigate the relationship between change on carbon-intensive industries has been climate policy uncertainty, oil prices, and renewable the subject of numerous studies. Using data from energy consumption. Dai and Zhang (2023) find that prediction markets, Meng (2017) analyse how changes CPU increases insolvency risk in commercial banks. in likelihood of carbon regulation is measured by the Tian et al. (2022) highlight the asymmetric effects of stock market. Schlenker and Taylor (2021) highlight CPU on green bond prices in US, Europe and China. the impact of expectations of future climate policies The pass-through effect of CPU index on domestic on the profitability of the energy industries. Pastor prices is relatively underexplored and this article fills et al. (2022) attribute the high performance of green that gap in the context of India. bonds to strong increases in environmental concerns III. Data and not to high expected returns. Similar conclusion Any analysis of the impact of climate change is arrived at in Ardia et al. (2023) using data for S&P on economic outcomes would require an adequate 500 companies. Bolton and Kacperczyk (2021) analyse measure of climate change that is able to capture the cross section of US stock returns and find that all aspects of the climate system consisting of stocks of firms with higher carbon dioxide emissions atmosphere, land surface, snow and ice, oceans earn higher returns highlighting the increased and other bodies of water, and living things. Given compensation demanded by investors for being that India is a price taker in global energy markets, exposed to carbon emission risk. an appropriate measure could be the CPU index There is no single instrument that is able to pertaining to global climate policy. The CPU Index has capture climate change in its full dimensionality. To been used as a benchmark for global climate risk in 196 RBI Bulletin April 2025Changing Dynamics of Climate Policy Uncertainty and Energy Commodity Prices ARTICLE analysis in the context of other developing economies arguing that climate-related uncertainty discourages (Ren et al., 2022; Dai and Zhang, 2023). Another firms from making investment in green energy advantage is that as compared to other climate change while the other view provides support for increased variables, CPU index is available at a higher frequency investment in cleaner energy in response to heightened (monthly). climate-related concerns. Consequently, the price of conventional energy may also be impacted in either The construction of CPU index is based on direction due to CPU. Lower/higher investment in the methodology outlined in Baker et al. (2016). In greener energy may imply delayed/faster transition to particular, eight leading US newspapers were searched greener energy and that may increase/decrease prices for keywords relating to climate change uncertainty and of energy commodities like oil, natural gas, and coal. average of the standardised scaled number of relevant It is also possible that the relationship is evolving and articles was considered to construct the index1. The changing with time depending on the climate policy monthly energy price index data is obtained from related discourse. Therefore, in order to analyse the World Bank Pink Sheet commodity markets data. The dynamic relationship between CPU and energy price energy index comprises of a weighted price index of index, a supremum Wald test was conducted to coal, crude oil and natural gas. The sample period identify the presence of structural breaks, if any. The used in the analysis is January 1991 – October 2022. results of the test highlight a structural break around The data on WPI is obtained from CEIC and a March 2017 (Annex Table A1). A scatter plot between consistent time series from January 1991 to October the two variables in the two samples also confirms the 2022 is obtained through splicing given the base year structural break and the change in the relationship. changes in 1993-94, 2004-2005 and 2011-2012. The While the pre-March 2017 relationship between the historical series has been constructed by using the variables is positive, the post-2017 relationship is latest series as the benchmark. negative (Chart 1). The change in relationship is robust to winsorising the data and, therefore, is not All the three variables are de-seasonalized, log- driven by a few outlier observations. transformed and detrended using a Baxter King filter and cycles are extracted. The detrending leads to the Chart 1: Relationship Between CPU Index and loss of observations of few months in the beginning World Bank Energy Index and the end of the sample, and the final sample consists of the period between May 1991 and May 2022. All the empirical analysis in the forthcoming sections is conducted on the extracted cycles of the series. IV. Methodology and Results The relationship between CPU, oil price and renewable energy consumption is dynamic and time varying (Zhou et al., 2023). As has been alluded to earlier, the relationship between CPU and energy prices could be either positive or negative with one view 1 For detailed explanation of the construction of the CPU index, see Source: Gavriilidis (2021); World Bank; and Authors’ Calculations. Gavriilidis (2021). RBI Bulletin April 2025 197 xednI ygrenE knaB dlroW 2. 1. 0 1.- 2.- -.5 0 .5 Climate Policy Uncertainty Index Before March 2017 Fitted values After March 2017 Fitted valuesARTICLE Changing Dynamics of Climate Policy Uncertainty and Energy Commodity Prices The results are consistent with extant empirical and climate policy uncertainty has moved from evidence that suggests a time-varying dynamic being pro-cyclical to counter-cyclical. This change in relationship between CPU index and energy prices. relationship between the two and its implications for Zhou et al. (2023) shows that the impact of CPU on India is formally analysed in the following section. oil prices is heterogeneous and dynamic. Using time- V. Impact on the Indian Economy of the Evolving varying Granger tests, Ren et al. (2023) find that the Dynamics of CPU and Energy Prices causal relationship between CPU and energy prices The analysis so far has indicated that the rises significantly in the aftermath of extreme climate relationship between CPU index and Energy index events or major climate-related policy changes. underwent a structural change and went from One potential explanation for the change in positive to negative post March 2017. Next, a series relationship from positive to negative could be the of econometric models are estimated using three increased global climate change policy effort post the variables for the two subsamples to determine if Paris Agreement that became effective in November the change in this relationship affects the Indian 2016. The Paris Agreement is a landmark international economy. The three variables in consideration are accord that aims to reduce global greenhouse gas CPU Index, Energy Commodity Price Index, and emissions to limit the global temperature increase India’s headline Wholesale Price Index (WPI). We in this century to 2 degrees Celsius and pursuing estimate a local linear projection (LLP) model of the the means to limit the increase to 1.5 degrees. Under following form the agreement, all major emitting countries made t commitments to cut their climate pollution. Post the y α βCPU γ ϵ where k t k k k t kj j i,t –1 signing of the Paris Agreement, many countries have + j t , = + + Χ + = 1, 2, ….10 The unit of analysis is observed value of the issued detailed Nationally Determined Contributions = ∑– 12 dependent variable in a month. The dependent (NDCs) that outline their respective climate action plan variable is the CPU, the global Energy Index or the to cut emissions and adapt to climate impacts. Prior to WPI. To generate the impulse response function, the Paris Agreement, the uncertainty in climate policy we need to measure the impact of a Climate Policy may have been regarding the likelihood of green Shock on the dependent variable at various transition. If there was an increase in uncertainty, it subsequent time horizons. Accordingly, k-number of may have suggested that the duration of a transition separate regressions with the k-leads of dependent will either be postponed or remain unchanged. This variable are run, where k=0, 1,…,10 months. The may have led to withholding of investment in green main explanatory variable is the contemporaneous projects and longer usage of traditional sources of cycle in CPU index. Control variables include up to energy. Post 2016, climate policy may have changed to twelve lags of the CPU index, and the dependent one of a faster than previously anticipated transition variable. to net zero. In the present scenario, any increase in uncertainty may be interpreted as to whether the The impulse response functions show that prior transition timeframe will be expedited or remain to March 2017, the relationship between CPU Index as anticipated. This may foster increased impetus and WPI was significant with CPU increase (decrease) towards green energy investments and a bearish resulting in WPI increase (decrease). However, the outlook for the conventional energy sources. As a response of Energy Index and WPI to CPU has reversed result, the relationship between energy price index since March 2017. While it was procyclical pre-March 198 RBI Bulletin April 2025Changing Dynamics of Climate Policy Uncertainty and Energy Commodity Prices ARTICLE Chart 2: Pre-March 2017 Relationship Between CPU Index, Energy Index and WPI May 1991 - March 2017 Impulse response of CPU to a shock on itself Impulse response of Energy Index to a Impulse response of WPI to shock on CPU Index a shock on CPU Index .2 .02 .002 .1 .01 .001 0 0 0 -.1 -.01 -.001 -.2 -.02 -.002 0 5 10 0 5 10 0 5 10 Months Months Months 95% CI Orthogonalized IRF 95% CI Orthogonalized IRF 95% CI Orthogonalized IRF Source: Authors’ Calculations. 2017 (Chart 2), it has become countercyclical since produce qualitatively similar results. Additionally, an then (Chart 3). Post March 2017, there is a negative indicator of global demand – the OECD composite effect of a positive CPU shock on energy prices and economic indicator for G20 economies, was WPI. Alternative econometric models were estimated introduced in the VARX and SVAR models. The results to check for the robustness of the results. A VARX do not differ significantly from the models without model with cycles of CPU Index used as an exogenous the aforementioned demand indicator (Annex Charts shock and an SVAR model with Cholesky ordering both A2-A5). Chart 3: Post-March 2017 Relationship Between CPU Index, Energy Index and WPI April 2017 - May 2022 Impulse response of CPU Index Impulse response of Energy Index Impulse response of WPI to a to a shock on itself to a shock on CPU Index shock on CPU Index .1 .03 .002 .001 .01 0 0 -.01 -.001 -.002 -.03 -.1 0 5 10 0 5 10 0 5 10 Months Months Months 95% CI Orthogonalized IRF 95% CI Orthogonalized IRF 95% CI Orthogonalized IRF Source: Authors’ Calculations. RBI Bulletin April 2025 199ARTICLE Changing Dynamics of Climate Policy Uncertainty and Energy Commodity Prices VI. Conclusion References Sustained use of fossil fuels to meet growing Adediran, I. A., Isah, K. O., Ogbonna, A. 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Zhou, D., Siddik, A. B., Guo, L., & Li, H. (2023). Dynamic relationship among climate policy uncertainty, oil Pástor, ., Stambaugh, R. F., & Taylor, L. A. (2021). price and renewable energy consumption—findings Sustainable investing in equilibrium. Journal of from TVP-SV-VAR approach. Renewable Energy, 204, Ľ Financial Economics, 142(2), 550-571. 722-732. RBI Bulletin April 2025 201ARTICLE Changing Dynamics of Climate Policy Uncertainty and Energy Commodity Prices Annexure Chart A1: Time series of the three indices 200 450 180 400 160 350 140 300 120 250 100 200 80 150 60 100 40 20 50 0 0 Table A1: Supremum Wald Test for Structural Break in Relationship between Energy Index and CPU Energy Index CPU Index 0.0065 (0.0173) Constant -0.0001 (0.0030) N 372 *p < 0.1, **p < 0.05, ***p < 0.01. Full sample: 1991m5 - 2022m4 Estimated break date: 2017m3 Ho: No structural break Test Statistic p-value SWALD 31.5702 0.0000 Exogenous variables: CPU Index Coefficients included in test: CPU Index; Constant 202 RBI Bulletin April 2025 19-naJ 29-yaM 39-peS 59-naJ 69-yaM 79-peS 99-naJ 00-yaM 10-peS 30-naJ 40-yaM 50-peS 70-naJ 80-yaM 90-peS 11-naJ 21-yaM 31-peS 51-naJ 61-yaM 71-peS 91-naJ 02-yaM 12-peS Energy Index WPI Climate Policy Uncertainty (RHS)Changing Dynamics of Climate Policy Uncertainty and Energy Commodity Prices ARTICLE Results from Alternative Specifications (includes OECD composite economic indicator for G20 economies) 1. VARX model with cycles of CPU index used as exogenous shock Chart A2: Pre-March 2017 Relationship Between CPU Index, Energy Index and WPI May 1991 - March 2017 Impulse Response of Energy Commodity Index to a Shock in CPU Index Impulse Response of WPI to a Shock in CPU Index .01 .05 0 0 -.05 -.01 0 2 4 6 8 0 2 4 6 8 Months Months 95% CI Dynamic multipliers 95% CI Dynamic multipliers Chart A3: Post-March 2017 Relationship Between CPU Index, Energy Index and WPI April 2017 - May 2022 Impulse Response of Energy Commodity Index to a Shock in CPU Index Impulse Response of WPI to a Shock in CPU Index .2 .01 0 0 -.2 -.01 0 2 4 6 8 0 2 4 6 8 Months Months 95% CI Dynamic multipliers 95% CI Dynamic multipliers Results are similar to those obtained using LLP although the coefficients of the post 2017 period are less significant statistically on account of widening confidence intervals. 2. SVAR with Cholesky Ordering A structural VAR using three variables, namely, CPU Index, Energy Commodity Price Index and WPI is estimated. The structural form of the regressions is as follows: B y A B y B y B y B y u t t t t s ts t Where y is a nx1 vector of vari0abl es, A is1 a n–1x 1 v2ect–2or of3 co–n3stants, B– is a nxn matrix of coefficients where t = + + + + … s + s =1, 2, 3….p are number of lags, and u is a nx1 vector of structural disturbances. t RBI Bulletin April 2025 203ARTICLE Changing Dynamics of Climate Policy Uncertainty and Energy Commodity Prices We assume Cholesky decomposition for identification. Therefore, the identification scheme is the following: Chart A4: Pre-March 2017 Relationship Between CPU Index, Energy Index and WPI May 1991 - March 2017 Impulse Response of CPU Index to Impulse Response of Energy Index Impulse Response of WPI a shock on itself to a shock on CPU Index to a shock on CPU Index .4 .04 2 .2 .02 0 0 0 -2 -.2 -.02 -4 -.4 0 2 4 6 8 10 0 2 4 6 8 10 0 2 4 6 8 10 Months Months Months 95% CI Impulse–response function 95% CI Impulse–response function 95% CI Impulse–response function Chart A5: Post-March 2017 Relationship Between CPU Index, Energy Index and WPI April 2017 - May 2022 Impulse Response of CPU Index Impulse Response of Energy Index Impulse Response of WPI to a shock on itself to a shock on CPU Index to a shock on CPU Index 1 .05 2 .5 0 0 0 -.5 -.05 -2 -1 -.1 -4 0 2 4 6 8 10 0 2 4 6 8 10 0 2 4 6 8 10 Months Months Months 95% CI Impulse–response function 95% CI Impulse–response function 95% CI Impulse–response function The results from SVAR model are similar to the ones obtained from LLP but with lower statistical significance on account of wider confidence intervals. 204 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Rural Consumer Confidence in sentiment of the rural and semi-urban households about the economy provides vital insights into India: Bridging the Gap economic outlook, purchasing behaviour, and overall well-being. by Sourajyoti Sardar, Manu Swarnkar, The Reserve Bank has been conducting household Ayan Paul, and Tushar B Das^ surveys like the Inflation Expectations Survey of Households (IESH) and the Consumer Confidence The Reserve Bank initiated the Rural Consumer Survey (CCS) to assess consumer sentiments. However, Confidence Survey (RCCS) in 2022 to inclusively these efforts have primarily focused on urban capture rural sentiments about the economy. The survey consumers. The ambit of household surveys to non- reveals improving perceptions of the general economic and urban areas was extended by initiating a bi-monthly employment situations, with future outlooks consistently RCCS in September 2022. The survey elucidates rural optimistic. Despite ongoing concerns, households exhibit consumers’ perceptions of their income and spending strong confidence in future income and resilient spending patterns, the prevailing price situation, and their behaviour. Inflation perceptions and expectations remain sentiment on the broader economic environment and high but show a moderating trend. The Current employment scenario. The design and implementation of the survey was under the guidance of the Technical Situation Index has steadily recovered, while the Future Advisory Committee on Surveys (TACS). Expectations Index indicates steady optimism. RCCS enriches the policymaking landscape by bringing rural This article provides a brief overview of the voices to the forefront, highlighting their evolving background, survey methodology and results in expectations and economic resilience. terms of descriptive statistics based on the RCCS data collected so far. The rest of the article is organised as Introduction follows. Section II of the article provides a background In India’s economic landscape, the rural1 sector on the evolution of the RCCS. The subsequent sections plays a crucial role, driving the nation’s growth and include a detailed overview of the survey methodology development. The importance of Indian rural markets and scope (Section III) and the presentation of is evident from the fact that about 56-60 per cent GDP, survey results (Section IV). The article concludes by 53 per cent of fast-moving consumer goods demand summarising the major findings and discussing their and 59 per cent of consumer durable demand is policy implications in Section V. originated from the rural areas (Ancarani, Fabio, et II. Background al., 2014). India’s rural populace is diverse in culture, The Reserve Bank has been exploring the prospect socioeconomic status, and geographic spread and the of expanding household surveys to encompass rural ^ The authors are from the Reserve Bank of India (RBI). The views and semi-urban areas and in March 2022, it was expressed in this article are those of the authors and do not represent the decided to extend the coverage of CCS to rural areas as views of the RBI. 1 The classification of population groups, such as rural, semi-urban, well. Subsequently, a draft questionnaire for collecting urban, and metropolitan, is sourced from the Central Information System the sentiments of rural consumers on various for Banking Infrastructure (CISBI) of the RBI. Areas with populations up to 9,999 are categorised as ‘Rural’, populations ranging from 10,000 to macro parameters was prepared. This, along with a 99,999 are labelled ‘Semi-Urban’, populations from 1,00,000 to 9,99,999 prospective sampling design almost akin to the urban fall under ‘urban’, and areas with populations of 10 lakh and above are designated as ‘metropolitan’. Urban surveys conducted by the RBI, namely household surveys and a detailed sampling frame, IESH and CCS, focus on urban and metropolitan centres, while the RCCS is specifically carried out in rural and semi-urban locations. was deliberated upon during several meetings of the RBI Bulletin April 2025 205ARTICLE Rural Consumer Confidence in India: Bridging the Gap Bank’s TACS and finalised for on-field implementation In September 2023, the survey coverage was (See Annex 1 for a discussion on TACS). expanded following a review of the RCCS pilot rounds. Seven additional states were added to the sampling An experimental survey was conducted in frame to improve representativeness, bringing the Malavali village under Pune district during the target sample size to 8,100. A year later, the coverage last week of June 2022 to check the efficacy of the was further extended to five new states/ union survey questionnaire. Based on the insights gathered, territories (UTs) including four north-eastern states the questionnaire was suitably amended and an viz., Arunachal Pradesh, Nagaland, Manipur, Mizoram, exploratory round of RCCS was launched in July 2022. and the Union Territory of Ladakh, targeting 500 Lessons from the exploratory round, such as larger additional households. With these additional samples time requirement as compared with urban surveys, and further addition of samples in existing states, the challenges in achieving the target sample size in many rural survey now encompasses 9000 households from villages, and mismatches in ground situation from 610 villages across 100 districts, covering all 28 Indian the data available from 2011 census were taken into states and three UTs and is conducted on a bi-monthly account to revise the sampling strategy. basis. Based on the revised sampling strategy, the first As a part of thorough testing of the survey process, pilot survey was initiated in September 2022 covering including the quality and consistency of the data, the 42 districts across 19 states, with a target sample work of conducting a rigorous statistical data audit size of 6,100. The districts were selected within a (SDA) was entrusted to the ISI, Kolkata (Annex 2). The reachable periphery around the RBI offices, allowing findings of the data audit reaffirmed the robustness of agency investigators to comfortably travel to the the survey. The suggestions on enhancing the survey locations for conducting surveys and RBI officials to process were deliberated upon and modifications timely complete verifications, ensuring data quality. were incorporated in the computer aided personal The sampling frame maintained a consistent 3:2 ratio interview (CAPI) script for better articulation and between rural and semi-urban centres. The targeted understanding by the survey respondents. number of interviews in each rural or semi-urban centre was set at 15, with the intention of gathering After due diligence on data quality and observation responses from a village to ensure diversity. The of consistency in results across various rounds, it survey used a fixed panel of districts within a state. was decided that the data from the RCCS would be released in public domain for easy access of various Three pilot rounds were conducted in September stakeholders. This is in alignment with the practice of 2022, November 2022 and January 2023. Further, two rounds of repeat surveys, alongside the normal pilot disseminating the information in public domain, as survey rounds, were conducted in May and July 2023 in the case of other surveys conducted by the Reserve canvassing the same questionnaire to the respondents Bank. who participated in the survey during previous III. Survey Framework and Methodology Overview rounds to test ‘response consistency’ across rounds. III.1 Questionnaire and Related Details The result of the repeat surveys indicated consistency with the corresponding pilot survey rounds for The RCCS questionnaire is designed from the almost all parameters. The data quality aspect was survey schedules of two flagship urban surveys viz., also ensured through the already tested verification CCS and IESH. Structured into four distinct blocks, processes similar to urban surveys. the questionnaire aims to gather comprehensive 206 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE information from rural and semi-urban respondents. data quality. The selection of districts is such that it The survey questionnaire is provided in Annex 3 for covers enough rural and semi-urban centres to achieve details regarding the exact nature of questions and target sample size. methods of assessment. In the first stage, primary sampling units (PSUs) Block I of the questionnaire captures essential also known as ‘first-stage units (FSUs)’, comprising demographic details, number of earning members, rural villages and semi-urban centres, are chosen average monthly income, and possession of agricultural through a systematic random sampling technique land. Block II complements respondents’ views and within the district. Rural and semi-urban centres are anticipations on the economy, focusing on general selected based on the presence of a minimum level of economic conditions, employment scenarios, and banking infrastructure to ensure an adequate number price levels, including inflation. Block III delves into of samples for the second-stage units (SSUs), namely participants’ perceptions and expectations regarding households. In case a chosen village falls under a their household’s income and spending. Using a restricted area, the nearest feasible village is selected three-point scale, respondents provide feedback on to maintain the integrity of the sampling procedure. the current situation compared to a year ago and their 15 households are interviewed in each selected expectations for the next year. Finally, Block IV of the village or semi-urban centres. The initial household questionnaire focuses on quantitative assessments of is chosen randomly, and subsequent households inflation perceptions and expectations. are selected using the right-hand rule, skipping five III.2 Coverage households after each successful interview, ensuring the spread of the sample within the centre. Non- Since July 2024, the updated survey scheme response situations are managed by selecting the covers over 100 districts across all Indian states and next available household for an interview. In multi- 3 UTs, with a target sample size of 9,000. To arrive at storied buildings or apartments, a maximum of two the sample size, a proportionate sampling scheme interviews are conducted per building. was used. In this process, the state-level sample size was determined based on the respective proportions III.4 Methodology of rural and semi-urban populations within each III.4.a Net Response and Summarising Indices state. This sampling scheme ensures the inclusion of In traditional opinion surveys, respondents are most states and population diversity in the survey, typically provided with three options, say, increase, making it one of the unique endeavours in consumer remained the same and decrease. Interpreting all three sentiment surveys globally. Table A1 in Annex 4 can be challenging, rather difficult, to comprehend. It provides a comprehensive list of states covered by the is, therefore, required to arrive at a single quantitative RCCS along with their respective target sample sizes. measure for general understanding of the movement III.3 Sampling Scheme of the parameter under consideration. A common The RCCS sampling scheme adopts a two-stage method for this transformation is through ‘Net approach similar to the urban surveys. To conform Responses,’ also known as ‘Balances’ or ‘Net Balances.’ with a two-stage sampling scheme, a fixed set of This metric is calculated by subtracting the percentage districts within a state are panelled keeping in view of respondents reporting a worsening (negative) from both representativeness and feasibility of completion the percentage reporting an improvement (positive) of verification within the stipulated time to ensure and can range from -100 to +100. RBI Bulletin April 2025 207ARTICLE Rural Consumer Confidence in India: Bridging the Gap In the RCCS, ‘net response’ is employed to derive IV. Survey Results2 two key indices that capture consumer confidences on IV.1 Respondents’ Profile two different time horizons—the Current Situation The March 2025 survey round reflects a male- Index (CSI), reflecting the present perceptions to-female respondent ratio of 3:2, with notable compared to a year ago, and the Future Expectations variations across different states. Around 83 per Index (FEI), indicating year ahead expectations. The cent of surveyed households indicated monthly calculation for both summary indices follows the household income below ₹25,000, while around 5 per formula: cent reported incomes surpassing ₹50,000 monthly Overall Index = 100 + Average (Net Response of (Chart 1a). In terms of education qualification, selected factors), nearly 60 per cent completed 10th standard, with around 40 per cent among them holding degrees or where, Net Response = Positive perception (in higher education. Homemakers and self-employed per cent) – Negative perception (in per cent) individuals, constituting a combined total of over 50 The average net responses on the current per cent, were the predominant occupational groups, perceptions on various factors, viz., economic with daily wage workers representing the third conditions, employment, price level, income and highest category of respondents (Chart 1b). Over 30 spending are used for the calculation of the CSI per cent of households possessed income-generating while the average net responses on the year ahead agricultural land. Detailed demographic distribution expectations on these factors are used to calculate the is given in Table A2 in Annex 4. FEI. The CSI and FEI have a range between 0 to 200, IV.2 Views on Macroeconomic Conditions with index values below 100 representing pessimism IV.2.a General Economic Situation and figures above 100 indicating optimism. Rural and semi-urban households voiced a notably III.4.b Estimation of Median Values negative sentiment (-27.7) regarding their perceptions The aggregation of median values for quantitative of the overall economic situation in September inflation perceptions and expectations employs a 2022, largely referring to the lingering distress of two-stage simple random sampling with replacement, the COVID-19 pandemic. Over time, their sentiment iteratively performed K times. In each iteration, the gradually improved, turning optimistic for the first median value of inflation perceptions/ expectations time in September 2023. This upward trend continued through March 2024, reflecting a remarkable 43-point is calculated from the resampled data. The arithmetic increase from the initial survey round in September mean of these K median values is then computed 2022. Perceptions of the current economic situation, as the aggregate median inflation perceptions/ however, began to decline thereafter, with the net expectations. Utilising these K median values and response dropping from 14.9 in March 2024 to 1.1 in their arithmetic mean, the aggregate-level standard November 2024, before showing improvement since error is subsequently calculated. the January 2025 survey round. (I) Despite these fluctuations, rural respondents consistently maintained optimism regarding the one- (II) Having illustrated the methodology, the rest of 2 It may be noted that the demographic as well as socioeconomic profile presented here corresponds to the Survey respondents and should not be this article presents the results of the survey. taken as representing the population characteristics. 208 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Chart 1: Demographic Distribution of the Respondents (March 2025) a. Average Monthly Income b. Occupation Share (in per cent) Share (in per cent) 9.8 16.4 12.4 2.9 11.4 3.7 1.3 33.0 26.3 39.8 29.0 Less than Rs. 5 thousand 14.0 Rs. 5 thousand - Less than Rs. 10 thousand Rs. 10 thousand - Less than Rs. 25 thousand Rs. 25 thousand - Less than Rs. 50 thousand Rs. 50 thousand - Less than Rs. 1 lakh Daily Workers Self Employed Salaried Employees Rs 1 lakh and above Homemakers Retired Persons Others Source: RBI's RCCS; and Authors’ calculations. year economic outlook since the survey’s inception. In reflects a pattern akin to that observed in the most rounds, over half of the respondents anticipated general economic situation. Starting with a net negative sentiment in September 2022, perceptions an improvement in the general economic situation of the current employment situation gradually (Chart 2; and Table B1 in Annex 5). improved, turning positive at the onset of 2024. IV.2.b Employment Condition This improvement persisted through March 2024 but began to moderate thereafter. Between July and The current sentiment among rural and semi- November 2024, sentiment remained pessimistic urban households regarding employment conditions before returning to optimism since January 2025. Looking ahead, respondents remain highly Chart 2: Sentiments on General optimistic about the one-year outlook for employment Economic Situation conditions. Consistently, more than half of the rural 50 34.6 36.6 respondents have expressed positivity about future employment prospects, with this figure exceeding 55 25 14.0 per cent since March 2024 (Chart 3; and Table B2 in 6.7 4.0 Annex 5). 0 IV.3 Households’ Assessment of their Income and Spending Situation -25 IV.3.a Income Scenario -27.7 The sentiment among rural and semi-urban -50 consumers regarding their current household income condition persisted in the pessimistic zone, with gradual decline in pessimism over the rounds. Since Sources: RBI's RCCS; and Authors’ calculations. May 2024, however, the progress slowed as pessimism RBI Bulletin April 2025 209 )esnopser teN( 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM Current Period One Year AheadARTICLE Rural Consumer Confidence in India: Bridging the Gap in their future earnings (Chart 4; and Table B5 in Chart 3: Sentiments on Employment Scenario Annex 5). While the rural and semi-urban populace continues to grapple with prevailing income-related concerns, the buoyant outlook regarding future income trajectories among households signals a promising undercurrent of economic resilience and confidence, indicative of evolving consumer confidence amidst dynamic economic landscapes. IV.3.b Spending Situation Since September 2022, rural and semi-urban households consistently exhibited a notably buoyant sentiment toward current spending, with the net response reaching its peak at 88.2 in March 2025. Sources: RBI's RCCS; and Authors’ calculations. Essential spending has been a primary driver of this overall outlay, although non-essential expenditures about the current income situation increased, before have also played a role in bolstering the aggregate easing in the most recent three survey rounds. expenditure. Initiating from the negative territory In contrast, rural households consistently in September 2022, the sentiment surrounding non-essential expenditures witnessed a remarkable maintained a highly optimistic outlook on future improvement, surging by nearly 38.7 points on a net income prospects throughout the survey period. basis to reach the 35.9 mark by March 2025. While Notably, around 90 per cent of respondents do not inflation may have contributed to higher essential anticipate any deterioration in their household spending, the recovery in income conditions and income over the next year, reflecting strong confidence seasonal push of purchase patterns indicate a rise in non-essential expenditures as well during the current period. Similarly, the outlook on future expenditures persisted within the ambit of high optimism, buoyed by both essential and non-essential spending. It is noteworthy that, on a net basis, sentiment regarding non-essential outlays for both the current period and one year ahead witnessed improvement, albeit at levels notably lower than essential spending (Chart 5; and Tables B6-B8 in Annex 5). IV.4 Assessment on Price level and Inflation Expectations IV.4.a Quantitative Assessment of Inflation Expectations The majority of rural and semi-urban households continue to be concerned about rising prices. 210 RBI Bulletin April 2025 )esnopser teN( 50 36.8 38.3 24.1 25 2.6 4.2 0 -15.7 -25 -50 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM Current Period One Year Ahead Chart 4: Sentiments on Households' Income Situation 75 50 47.048.7 39.7 25 0 -5.2 -7.0 -25 -20.2 -50 Sources: RBI's RCCS; and Authors’ calculations. )esnopser teN( 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM Current Period One Year AheadRural Consumer Confidence in India: Bridging the Gap ARTICLE Chart 5: Sentiments on Households' Spending Situation a. Current Period Compared to One Year Ago b. One Year Ahead from Now 100 85.4 87.6 82.4 86.0 88.2 75 74.1 50 35.9 34.2 25 0 -2.8 -25 Source: RBI's RCCS; and Authors’ calculations. Despite a 230 basis points (bps) cumulative decline current inflation and its future trajectory follows a in their perception of current overall inflation from similar trend to their quantitative assessment. The September 2022 to May 2024, rural and semi-urban March 2025 survey, however, showed a 15.6 points households remained cautious about year-ahead net reduction in pessimism in the current perception inflation expectations, as it decreased by only 90 bps of inflation compared to September 2022. The year- during the same period. Since July 2024, inflation ahead outlook, however, recorded a lower magnitude perceptions have trended upward, largely due to (10.6 point) net reduction in pessimism (Chart 7; and rising food prices, especially vegetables. However, as Tables B3-B4 in Annex 5). food prices began to ease, the January 2025 survey reflected a moderation in these perceptions. By March 2025, households’ current inflation perception had declined by 40 bps over the previous round to 6.6 per cent. Inflation expectations for the year ahead also recorded a cumulative decline of 40 bps over the last two survey rounds, although the level remained high at 9.3 per cent in March 2025 (Chart 6). IV.4.b Qualitative Assessment on Price Level and Inflation Expectations Households’ sentiment regarding the general price level has remained consistently pessimistic throughout all the rounds of surveys. The majority of households have reported an increase in prices and anticipate that they will remain elevated over the next year. The qualitative assessment of both RBI Bulletin April 2025 211 esnopser teN 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM 100 87.2 89.2 82.4 87.2 88.9 75 78.1 55.7 57.3 50 25 16.7 0 Essential Spending Non-Essential Spending Overall Spending )esnopser teN( 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM Essential Spending Non-Essential Spending Overall Spending Chart 6: Median Inflation Rate - Perceptions and Expectations 11 10.5 10 9.6 9 8.7 9.3 8 7 7.0 6.6 6 5 4 Sources: RBI's RCCS; and Authors’ calculations. tnec reP 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM Current Perception One Year Ahead ExpectationsARTICLE Rural Consumer Confidence in India: Bridging the Gap Chart 7: Sentiments on Price Levels and Inflation a. Overall Price Situation b. Rate of Price Change -70 -75 -80 -82.8 -85.0 -85 -84.9 -90 -93.6 -95 -95.8 -96.2 -100 Source: RBI's RCCS; and Authors’ calculations. IV.4.c Distribution of Responses by Inflation three-fourth of the respondents now perceived less Expectations than 10 per cent inflation in the latest survey round, conducted in March 2025. It is evident that the shift A chronological presentation of the distribution predominantly came from the highest inflation of respondents across different inflation brackets bracket. Similarly, the proportion of respondents offers insight into the changing perceptions of anticipating inflation to stay below 10 per cent in the inflation over time. Notably, while little above the coming year also exhibit a similar trend, though the half of the surveyed households perceived inflation share is much lower than the current perceptions to be less than 10 per cent in September 2022, around (Chart 8). 212 RBI Bulletin April 2025 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM -70 -74.0 -75 -77.3 -74.6 -80 -77.2 -85.2 -85 -90 -89.6 -95 -100 )esnopser teN( 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM Current Period One Year Ahead Current Period One Year Ahead )esnopser teN( Chart 8: Distribution of Responses by Inflation Perceptions and Expectations a. Current Period b. One Year Ahead Source: RBI's RCCS; and Authors’ calculations. 2.7 7.41 5.62 3.74 9.7 2.51 5.32 4.94 100% 80% 60% 40% 20% 0% tnec reP 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM Less than 6% 6% to 10% 10% to 12% 12% to 16% >=16% 9.11 1.31 4.61 1.03 0.82 0.315.11 1.51 2.03 1.03 100% 80% 60% 40% 20% 0% tnec reP 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM Less than 6% 6% to 10% 10% to 12% 12% to 16% >=16%Rural Consumer Confidence in India: Bridging the Gap ARTICLE IV.4.d Inflation Expectations by Income and IV.5 Summary Indices Occupation Category IV.5.a Current Situation Index (CSI) Inflation perceptions and expectations vary across The CSI has shown consistent and notable income and occupation categories. In March 2025, improvement over time. Beginning at 82.9 within retired individuals reported relatively high current- the pessimistic territory in September 2022, the CSI period inflation, while both homemakers and retirees has undergone substantial recovery, entering positive expressed concerns about future inflation. Similarly, territory (100.4) in the March 2024 survey round. in the previous three survey rounds, retirees raised The momentum in the CSI moderated during the concerns about both current inflation and future second half of 2024, hovering near the neutral line expectations. However, this pattern does not hold while staying in negative territory. Current sentiment consistently across all survey rounds (Table 1; and again showed improvement since January 2025 round Tables C1-C2 in Annex 6). (Chart 9). Variation is evident among various other socio- IV.5.b Future Expectations Index (FEI) economic classes concerning household sentiments The FEI provides a forward-looking perspective, regarding inflation perception and expectations. indicating consistent positivity and gradual Further details are provided in Annex 6. improvement over time. Outlook of the households Table 1: Median Inflation Perceptions and cumulatively improved by 9.9 points since September Expectations in March 2025 2022, reaching 125.9 in March 2025 (Chart 9). (in per cent) IV.5.c Confidence among Various Income Groups and Average monthly Income wise Occupation Categories Income bracket Current One year ahead Median Std. Median Std. In a robust survey framework, it is natural to Error Error anticipate heterogeneity in economic perceptions and Less than ₹5 thousand 6.2 0.38 9.9 0.34 ₹5 thousand - Less than 6.6 0.28 8.9 0.22 expectations among various socio-economic groups. ₹10 thousand ₹10 thousand - Less than 6.3 0.27 9.2 0.29 ₹25 thousand 130 125.9 ₹25 thousand - Less than 7.0 0.46 9.3 0.43 ₹50 thousand 120 124.1 ₹50 thousand - Less than 6.0 0.26 8.8 0.57 ₹1 lakh 114.2 ₹1 lakh and above 6.3 0.45 8.0 0.47 110 Occupation wise 100.1 100 Occupation Category Current One year ahead Median Std. Median Std. 98.0 90 Error Error Daily Worker 6.6 0.39 9.3 0.36 80 82.9 Self Employed 6.9 0.38 9.0 0.34 Salaried Employee 6.5 0.35 9.1 0.32 70 Homemaker 6.4 0.29 9.5 0.31 Retired Person 7.6 0.83 9.5 0.79 Others 6.1 0.25 8.8 0.29 Notes: Figures are compiled based on 31 states/ UTs. Sources: RBI’s RCCS; and Authors’ calculations. RBI Bulletin April 2025 213 evitisoP evitageN stnemitnes stnemitnes 22-peS 22-voN 32-naJ 32-raM 32-yaM 32-luJ 32-peS 32-voN 42-naJ 42-raM 42-yaM 42-luJ 42-peS 42-voN 52-naJ 52-raM Chart 9: Consumer Confidence Indices Current Situation Index Future Expectations Index Sources: RBI's RCCS; and Authors’ calculations.ARTICLE Rural Consumer Confidence in India: Bridging the Gap In general, responses from higher income brackets situation and employment conditions staged a marked consistently suggest a better economic outlook, which recovery since 2022, despite intermittent setbacks. is also mirrored in the summary indices (Table D1 in Optimism about future income prospects remains Annex 7). a key highlight, with rural households consistently expecting better earnings over the next year. Spending The salaried class emerges as the most optimistic sentiment has remained robust, primarily driven by among the groups regarding confidence in the current essential spending, while non-essential expenditures economic situation. Conversely, according to the FEI, have also shown gradual improvement, reflecting both the salaried class and homemakers exhibit high resilience in a challenging economic scenario. levels of optimism (Table D2 in Annex 7). The perceptions about current inflation have V. Conclusion shown a declining trend over time, barring brief Understanding evolution of sentiments of episodes of heightened concern, driven by elevated economic agents regarding economic conditions is food prices. These have also translated to lower vital for evidence-based policy making. Recognising inflation expectations, albeit with the rate of decline the need for making such surveys more inclusive, being slower. Borad measures of consumer sentiments, the Reserve Bank initiated a RCCS in 2022 to gauge such as the CSI has shown a remarkable recovery, rural sentiments, in line with the existing surveys of hovering around neutral levels in recent rounds, urban households. This article presents the sampling while the FEI continues to signal strong optimism. framework, and methodology of the RCCS along With the introduction of this survey, the information with the results based on trends observed in rural set available for policy making has expanded, as consumer confidence and inflation expectations. assessments and aspirations of rural consumers, a The results from various survey rounds reveal major conduit of inclusive economic progress, are that households’ perceptions of the general economic explicitly captured. 214 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Annex 1: Technical Advisory Committee on Surveys (TACS) To measure household inflation expectations, RBI has been conducting IESH survey since 2005 across different population groups in major urban centres across the country. The survey results were regularly presented at the quarterly Monetary Policy Strategy meetings, with key insights shared during the Technical Advisory Committee on Monetary Policy (TACMP) meeting. Given the sensitive nature of the data, particularly prior to its public disclosure, the seventh TACMP meeting in January 2007 stressed the importance of ensuring the survey’s methodological integrity, quality, and consistency. Consequently, in March 2007, recognising the need for structured technical guidance on various surveys, the Reserve Bank constituted the TACS, under the chairmanship of Dr. Rakesh Mohan, the then DG. This high-level committee comprised of external experts from institutions of repute, like Indian Statistical Institute (ISI), Indira Gandhi Institute of Development Research (IGIDR), and market analysts, along with representatives from relevant user departments, viz., Department of Economic Research and Policy (DEPR) and Monetary Policy Department (MPD). Currently, the TACS is chaired by the DG with ED as the vice-chairman. The panel of external experts currently part of the TACS are from ISI; IGIDR; National Council of Applied Economic Research (NCAER); and National Statistical Office (NSO), Government of India. RBI Bulletin April 2025 215ARTICLE Rural Consumer Confidence in India: Bridging the Gap Annex 2: Statistical Data Audit The RBI gathers macroeconomic and financial statistics, through regulatory and supervisory reporting and also from various structured surveys, forming the foundation for informed decision-making and policy formulation. To improve the foundation of data quality, the RBI has instituted a mechanism to conduct Statistical Data Audit (SDA) of such important and valuable data. This structured statistical audit evaluates the consistency, integrity, and reliability of the statistical data, ensuring transparency and professional accuracy in its usage. However, confidentiality and security of internal data remained top priority for the RBI, with robust data management protocols in place. The Indian Statistical Institute (ISI), recognised as an Institution of National Importance, plays a pivotal role in theoretical and applied statistics. The RBI has entered into a memorandum of understanding (MoU) with the ISI to conduct the statistical data audit for the survey data used by the Bank. As a first reference, the ISI was entrusted to conduct the statistical audit of the data of six pilot rounds of the RCCS. The key deliverables included evaluation of data sources, a report on data cleaning, review of sampling methodology, application of statistical analysis techniques, validation of results, examination of assumptions and limitations, documentation of reproducibility, compliance verification and an audit summary with recommendations. In its report, the ISI has appreciated the work and recognised the issues and challenges of conducting field survey in rural and semi-urban villages in India. They have also acknowledged that RCCS is an intense survey and conducting the same in bi-monthly frequency with limited resources itself is a challenge. The summary observations of the ISI’s data audit are given below: a) the steadiness of the pattern of stochastic dominance of the distribution of survey parameters of RCCS is consistent with the presumption of the propriety of the survey and thus, concluded that the qualitative data of the rural survey is consistent. b) the in-built validation checks of the CAPI script to ensure data consistency of the survey was discussed at length in the report. The TACS, based on these observations, recommended continuing the survey with the existing sampling design and consider publishing the data in public domain for wider circulation. 216 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Annex 3: Survey Questionnaire The RBI conducts nation-wide RCCS every two months among households in select states with an objective to assess their current perceptions and future expectations on various economic parameters including prices and inflation. Personal information of all respondents are kept confidential and not disseminated; only aggregated results are published. Are you willing to participate in the survey? Yes/No Block I: Respondent’s Details Name Address1 - House Number/Building Name Address Address2 - Colony/Street/Village Landmark Village/District Pin Code Telephone Number Age of the respondent (in completed years, 21 years and above) Gender Male Female Others Salaried Employee Other self employed Home maker [1] [2] [3] Occupation Others (Unemployed, Daily Worker Retired Person student etc.) [4] [5] [6] Agricultural land Yes No Family Members 1 or 2 [1] 3 or 4 [2] 5 and more [3] Number of Earning members Less than ₹5 thousand ₹5 thousand - ₹10 thousand ₹10 thousand - ₹25 thousand [1] [2] [3] Average Monthly Income ₹25 thousand - ₹50 thousand ₹50 thousand - ₹1 lakh ₹1 lakh and above [4] [5] [6] Illiterate [1] Below 5th Std [2] 5th Std-Below 10th Std [3] Educational Qualification 10th Std-Below 12th Std 12th Std Graduate Postgraduate [4] [5] [6] [7] RBI Bulletin April 2025 217ARTICLE Rural Consumer Confidence in India: Bridging the Gap Block II: Respondent’s Perceptions and Expectations about the economy Q. As compared with one -year ago One-year from now No. Improved/ Remained Worsened/ Will Remain the Will Increased the same Decreased Improve/ same Worsen/ Increase Decrease 1 General economic situation [1] [2] [3] [1] [2] [3] 2 Employement scenario [1] [2] [3] [1] [2] [3] Block III: Perceptions and Expectations about the household Q. As compared with one -year ago One-year from now No. Improved/ Remained Worsened/ Will Remain the Will Increased the same Decreased Improve/ same Worsen/ Increase Decrease 3 Household Income [1] [2] [3] [1] [2] [3] 4a Expenditure on essential items [1] [2] [3] [1] [2] [3] 4b Expenditure on non-essential [1] [2] [3] [1] [2] [3] items 4 Overall Spending [1] [2] [3] [1] [2] [3] Q5 [If Q4_1 = <Increased / Decreased>] Why have you <increased/decreased> your (or other family members’) spending? (Choose all applicable answers) Yes No a. Because your income has <increased/decreased>. [1] [2] b. Because value of your investments/wealth has <increased/decreased>. [1] [2] Because your expenditure towards large ticket purchases such as real estate, car, consum- c. [1] [2] er durable goods has <increased/decreased>. Because the cost of consumer goods, cost of services (e.g., medical, education, transport, d. [1] [2] etc.) has <gone up/gone down>. e. Others (Please Specify) [1] [2] Current financial situation Saving a lot Saving a Just making Drawing on past Running debt Q6 of Household little ends meet saving 218 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Block IV: Perceptions and Expectations about prices and rate of price change Q. As compared with one -year ago One-year from now No. Increased Remained Decreased Will Remain Will the same Increase the same Decrease 7 Overall prices of goods [1] [2] [3] [1] [2] [3] and services 8 Rate of price change* [1] [2] [3] [1] [2] [3] 8a Current inflation rate# < 1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 per cent per cent per cent per cent per cent per cent per cent per cent per cent 9-10 10-11 11-12 12-13 13-14 14-15 15-16 >=16 No idea per cent per cent per cent per cent per cent per cent per cent per cent 8b Inflation rate after < 1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 1 year# per cent per cent per cent per cent per cent per cent per cent per cent per cent 9-10 10-11 11-12 12-13 13-14 14-15 15-16 >=16 No idea per cent per cent per cent per cent per cent per cent per cent per cent *- If you choose (1) in Question 7, please answer Question 8. #- The Inflation rate is the annual rate of the price change. Please tick relevant options for each question. RBI Bulletin April 2025 219ARTICLE Rural Consumer Confidence in India: Bridging the Gap Annex– 4 Table A1: State Wise Target Sample Size State Targeted Sample Size Andhra Pradesh* 300 Arunachal Pradesh** 100 Assam 200 Bihar 800 Chhattisgarh 150 Delhi 100 Goa* 100 Gujarat 550 Haryana 200 Himachal Pradesh* 100 Jammu and Kashmir 100 Jharkhand 200 Karnataka 500 Kerala 200 Ladakh (UT)** 100 Madhya Pradesh 400 Maharashtra 1000 Manipur** 100 Meghalaya* 100 Mizoram** 100 Nagaland** 100 Odisha 300 Punjab 150 Rajasthan 400 Sikkim* 100 Tamil Nadu 450 Telangana 300 Tripura* 100 Uttar Pradesh 1000 Uttarakhand* 100 West Bengal 600 Total 9000 Notes: **: Added since July 2024. *: Added since September 2023. Sources: RBI’s RCCS; and Authors’ calculations. 220 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Table A2: Demographic Distribution of Respondents in March 2025 (in per cent) Share of Respondents Gender Wise Female 41.9 Male 58.1 Age Group Wise 21-29 Years 27.8 30-39 Years 26.8 40-59 Years 33.4 60 Years and above 12.1 Occupation Group Wise Daily Workers 16.4 Self Employed 29.0 Salaried Employees 14.0 Homemakers 26.3 Retired Persons 2.9 Others 11.4 Average Monthly Income Wise Less than ₹ 5 thousand 9.8 ₹ 5 thousand - Less than ₹ 10 thousand 33.0 ₹ 10 thousand - Less than ₹ 25 thousand 39.8 ₹ 25 thousand - Less than ₹ 50 thousand 12.4 ₹ 50 thousand - Less than ₹ 1 lakh 3.7 Rs 1 lakh and above 1.3 Education Qualification Wise Illiterate 6.1 Below 5th Std 6.1 5th Std to <10th Std 28.6 10th Std to <12th Std 18.3 12th Std 18.4 Graduate 17.8 Postgraduate 4.7 Share of households having Agricultural Land* 32.0 Notes: * Agricultural land generating income. Sources: RBI’s RCCS; and Authors’ calculations. RBI Bulletin April 2025 221ARTICLE Rural Consumer Confidence in India: Bridging the Gap Annex– 5 Table B1: Perceptions and Expectations on the General Economic Situation (Percentage responses) Survey Current Perceptions One year ahead Expectations Round Improved Remained Worsened Net Improve Remains Worsen Net same Response same Response Sep-22 27.6 17.1 55.3 -27.7 48.3 17.4 34.3 14.0 Nov-22 30.8 18.6 50.6 -19.8 51.4 16.4 32.3 19.1 Jan-23 32.5 20.7 46.8 -14.3 54.5 17.7 27.8 26.6 Mar-23 33.7 21.3 45.0 -11.3 52.5 18.2 29.3 23.1 May-23 33.7 24.3 42.0 -8.4 52.4 19.7 27.9 24.6 Jul-23 34.1 21.8 44.1 -10.0 51.2 18.6 30.2 21.0 Sep-23 40.8 20.4 38.8 2.0 58.0 16.5 25.6 32.4 Nov-23 39.0 21.7 39.3 -0.3 58.5 16.4 25.2 33.3 Jan-24 41.7 23.3 35.1 6.6 61.8 16.4 21.8 40.0 Mar-24 45.9 23.1 31.0 14.9 63.3 15.8 20.9 42.4 May-24 44.6 22.4 33.0 11.6 61.2 17.2 21.7 39.5 Jul-24 39.6 25.6 34.8 4.8 58.1 16.9 25.0 33.1 Sep-24 39.9 25.4 34.8 5.1 57.2 19.2 23.6 33.6 Nov-24 38.2 24.7 37.1 1.1 57.9 18.1 24.0 34.0 Jan-25 39.4 25.2 35.4 4.0 58.8 17.0 24.2 34.6 Mar-25 41.4 23.8 34.7 6.7 60.0 16.6 23.4 36.6 Notes: Up to Jul-23, figures are based on 19 states/ UTs; from September 2023, figures are based on 26 states/ UTs; from July 2024, figures are compiled based on 31 states/ UTs; Sources: RBI’s RCCS; and Authors’ calculations. 222 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Table B2: Perceptions and Expectations on Employment (Percentage responses) Survey Current Perceptions One year ahead Expectations Round Improved Remained Worsened Net Improve Remains Worsen Net same Response same Response Sep-22 31.7 21.0 47.4 -15.7 51.9 20.3 27.8 24.1 Nov-22 34.0 20.2 45.8 -11.8 53.1 18.9 27.9 25.2 Jan-23 33.6 24.2 42.2 -8.6 56.1 20.0 23.9 32.3 Mar-23 34.2 23.6 42.2 -8.0 53.7 20.8 25.5 28.3 May-23 33.2 26.4 40.4 -7.2 54.5 21.0 24.6 29.9 Jul-23 34.7 25.6 39.7 -5.0 52.8 21.9 25.3 27.5 Sep-23 36.9 25.1 38.1 -1.2 56.3 19.9 23.8 32.5 Nov-23 36.9 24.4 38.7 -1.8 57.7 19.0 23.3 34.4 Jan-24 37.8 25.6 36.6 1.2 61.0 18.1 20.9 40.1 Mar-24 40.6 24.8 34.6 6.0 62.1 17.5 20.4 41.7 May-24 39.4 23.8 36.8 2.5 60.4 18.5 21.2 39.2 Jul-24 35.0 27.1 37.9 -2.9 57.7 19.0 23.3 34.4 Sep-24 35.9 26.2 37.9 -2.0 57.1 20.9 22.1 35.0 Nov-24 36.6 25.6 37.8 -1.2 58.4 19.4 22.2 36.1 Jan-25 38.4 25.8 35.8 2.6 58.9 19.0 22.1 36.8 Mar-25 39.6 24.9 35.4 4.2 59.8 18.8 21.5 38.3 Notes: Up to Jul-23, figures are based on 19 states/ UTs; from September 2023, figures are based on 26 states/ UTs; from July 2024, figures are compiled based on 31 states/ UTs; Sources: RBI’s RCCS; and Authors’ calculations. RBI Bulletin April 2025 223ARTICLE Rural Consumer Confidence in India: Bridging the Gap Table B3: Perceptions and Expectations on Price Level (Percentage responses) Survey Current Perceptions One year ahead Expectations Round Increased Remained Decreased Net Will Will Will Net Same Response Increase Remain Decrease Response Same Sep-22 96.8 2.5 0.7 -96.2 89.9 5.1 4.9 -85.0 Nov-22 97.2 2.4 0.5 -96.7 90.8 5.1 4.1 -86.7 Jan-23 96.1 3.1 0.8 -95.3 91.2 4.9 3.9 -87.3 Mar-23 96.0 3.2 0.8 -95.2 91.2 5.6 3.2 -88.0 May-23 95.9 3.2 0.9 -95.0 89.8 5.0 5.2 -84.7 Jul-23 96.3 3.0 0.7 -95.5 89.8 4.3 6.0 -83.8 Sep-23 94.9 3.9 1.2 -93.7 87.8 5.7 6.5 -81.3 Nov-23 95.4 3.7 0.9 -94.4 90.2 5.2 4.6 -85.5 Jan-24 94.7 4.6 0.7 -94.0 90.0 5.2 4.8 -85.2 Mar-24 94.6 4.3 1.1 -93.5 90.2 5.7 4.1 -86.1 May-24 94.6 4.3 1.1 -93.5 90.3 5.3 4.4 -85.9 Jul-24 96.2 3.2 0.6 -95.6 91.2 4.7 4.1 -87.1 Sep-24 96.1 2.7 1.1 -95.0 89.6 5.2 5.2 -84.5 Nov-24 96.6 3.0 0.4 -96.3 90.0 5.0 5.0 -85.0 Jan-25 96.2 3.3 0.4 -95.8 90.0 5.0 5.1 -84.9 Mar-25 95.1 3.4 1.5 -93.6 88.7 5.4 5.9 -82.8 Notes: Up to Jul-23, figures are based on 19 states/ UTs; from September 2023, figures are based on 26 states/ UTs; from July 2024, figures are compiled based on 31 states/ UTs; Sources: RBI’s RCCS; and Authors’ calculations. 224 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Table B4: Perceptions and Expectations on Rate of Change in Price Level (Inflation)* (Percentage responses) Survey Current Perceptions One year ahead Expectations Round Price Price Price Net Price Price Price Net Increase Increase Increase Response Increase Increase Increase Response More Than Similar to Less Than More Than Similar to Less Than Last Year Last Year Last Year Current Current Current Rate Rate Rate Sep-22 91.5 6.6 1.9 -89.6 88.7 7.9 3.5 -85.2 Nov-22 91.7 5.7 2.6 -89.1 89.9 7.0 3.0 -86.9 Jan-23 91.6 6.6 1.9 -89.7 90.9 6.8 2.3 -88.6 Mar-23 91.3 7.3 1.4 -89.9 91.3 7.1 1.7 -89.6 May-23 91.0 6.9 2.1 -88.9 90.6 6.5 2.9 -87.7 Jul-23 92.8 5.1 2.1 -90.7 90.4 5.6 4.1 -86.3 Sep-23 89.9 7.5 2.7 -87.2 88.8 6.6 4.6 -84.3 Nov-23 89.8 7.1 3.1 -86.7 91.4 5.7 2.9 -88.5 Jan-24 88.8 8.0 3.2 -85.6 91.6 5.1 3.3 -88.3 Mar-24 78.1 17.2 4.7 -73.4 82.5 14.3 3.1 -79.4 May-24 78.9 15.4 5.7 -73.2 82.3 15.3 2.4 -80.0 Jul-24 80.5 15.2 4.3 -76.2 83.6 13.5 2.9 -80.7 Sep-24 80.6 14.6 4.8 -75.8 81.8 15.4 2.8 -79.0 Nov-24 82.3 14.2 3.5 -78.8 83.6 12.3 4.2 -79.4 Jan-25 80.4 16.5 3.1 -77.3 80.5 16.3 3.2 -77.2 Mar-25 78.3 17.4 4.3 -74.0 79.3 16.0 4.7 -74.6 Notes: Up to Jul-23, figures are based on 19 states/ UTs; from September 2023, figures are based on 26 states/ UTs; from July 2024, figures are compiled based on 31 states/ UTs; *Applicable only for those respondents who felt price has increased/price will increase. Sources: RBI’s RCCS; and Authors’ calculations. RBI Bulletin April 2025 225ARTICLE Rural Consumer Confidence in India: Bridging the Gap Table B5: Perceptions and Expectations on Income (Percentage responses) Survey Current Perceptions One year ahead Expectations Round Increased Remained Decreased Net Will Will Will Net Same Response Increase Remain Decrease Response Same Sep-22 20.1 39.7 40.2 -20.2 52.2 35.3 12.5 39.7 Nov-22 22.0 41.6 36.4 -14.3 52.6 35.6 11.9 40.7 Jan-23 22.0 43.9 34.2 -12.2 55.6 33.8 10.7 44.9 Mar-23 21.2 44.6 34.3 -13.1 54.2 33.6 12.2 42.0 May-23 21.1 45.9 33.0 -11.8 54.2 33.8 12.0 42.1 Jul-23 22.7 44.3 33.1 -10.4 54.8 33.2 12.0 42.8 Sep-23 23.6 43.9 32.5 -8.9 55.8 32.3 11.9 43.9 Nov-23 24.5 43.1 32.4 -8.0 56.8 31.3 11.9 45.0 Jan-24 22.4 47.3 30.3 -7.9 57.4 30.7 11.9 45.5 Mar-24 23.8 47.6 28.6 -4.8 59.0 30.3 10.7 48.4 May-24 22.5 46.4 31.2 -8.7 57.4 31.0 11.6 45.8 Jul-24 22.7 45.0 32.4 -9.7 57.5 30.5 12.0 45.5 Sep-24 23.3 44.1 32.6 -9.3 57.1 31.9 11.0 46.2 Nov-24 24.2 43.3 32.5 -8.3 58.2 30.1 11.7 46.5 Jan-25 23.7 45.6 30.7 -7.0 58.4 30.1 11.5 47.0 Mar-25 24.7 45.3 29.9 -5.2 59.0 30.8 10.3 48.7 Notes: Up to Jul-23, figures are based on 19 states/ UTs; from September 2023, figures are based on 26 states/ UTs; from July 2024, figures are compiled based on 31 states/ UTs; Sources: RBI’s RCCS; and Authors’ calculations. 226 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Table B6: Perceptions and Expectations on Spending (Percentage responses) Survey Current Perceptions One year ahead Expectations Round Increased Remained Decreased Net Will Will Will Net Same Response Increase Remain Decrease Response Same Sep-22 80.1 14.0 6.0 74.1 82.2 13.7 4.1 78.1 Nov-22 79.5 14.5 6.0 73.5 81.4 14.2 4.4 77.0 Jan-23 79.4 15.7 4.9 74.6 81.9 14.2 3.9 78.0 Mar-23 80.7 15.2 4.1 76.6 82.9 13.9 3.2 79.7 May-23 80.5 13.6 5.9 74.7 83.5 11.7 4.9 78.6 Jul-23 83.4 13.3 3.4 80.0 84.8 12.0 3.2 81.6 Sep-23 81.2 15.0 3.8 77.4 84.2 12.3 3.5 80.6 Nov-23 80.8 16.0 3.2 77.6 84.6 12.4 3.0 81.6 Jan-24 80.0 16.5 3.5 76.5 84.4 12.2 3.3 81.1 Mar-24 82.5 14.4 3.1 79.5 85.7 11.6 2.8 82.9 May-24 85.0 12.3 2.7 82.3 87.1 10.4 2.5 84.7 Jul-24 86.2 11.5 2.2 84.0 88.5 9.1 2.4 86.1 Sep-24 87.9 9.7 2.5 85.4 88.8 9.2 2.0 86.9 Nov-24 88.5 9.6 1.9 86.6 90.0 8.0 2.0 88.0 Jan-25 87.9 10.3 1.9 86.0 89.0 9.3 1.8 87.2 Mar-25 90.5 7.3 2.2 88.2 90.8 7.4 1.9 88.9 Notes: Up to Jul-23, figures are based on 19 states/ UTs; from September 2023, figures are based on 26 states/ UTs; from July 2024, figures are compiled based on 31 states/ UTs; Sources: RBI’s RCCS; and Authors’ calculations. RBI Bulletin April 2025 227ARTICLE Rural Consumer Confidence in India: Bridging the Gap Table B7: Perceptions and Expectations on Spending- Essential Items (Percentage responses) Survey Current Perceptions One year ahead Expectations Round Increased Remained Decreased Net Will Will Will Net Same Response Increase Remain Decrease Response Same Sep-22 86.8 8.9 4.3 82.4 85.9 10.6 3.5 82.4 Nov-22 87.5 8.7 3.9 83.6 85.3 11.4 3.4 81.9 Jan-23 86.4 9.7 3.8 82.6 85.6 11.3 3.2 82.4 Mar-23 87.1 10.0 2.9 84.1 87.4 10.1 2.6 84.8 May-23 86.8 8.9 4.2 82.6 87.6 9.0 3.4 84.2 Jul-23 89.1 8.5 2.4 86.7 87.6 9.8 2.7 84.9 Sep-23 86.5 10.4 3.1 83.4 86.8 9.9 3.4 83.4 Nov-23 86.8 10.3 2.9 83.9 88.2 9.2 2.6 85.6 Jan-24 85.8 11.7 2.5 83.3 87.4 9.5 3.1 84.3 Mar-24 85.1 12.1 2.8 82.3 88.0 9.4 2.6 85.4 May-24 87.2 10.4 2.4 84.8 88.8 8.6 2.5 86.3 Jul-24 88.1 9.6 2.3 85.8 89.2 8.4 2.5 86.7 Sep-24 89.1 8.5 2.4 86.7 89.9 8.0 2.1 87.8 Nov-24 89.1 8.9 2.1 87.0 90.0 7.9 2.1 87.9 Jan-25 87.9 9.5 2.6 85.4 89.5 8.2 2.3 87.2 Mar-25 89.8 8.0 2.2 87.6 91.2 6.9 2.0 89.2 Notes: Up to Jul-23, figures are based on 19 states/ UTs; from September 2023, figures are based on 26 states/ UTs; from July 2024, figures are compiled based on 31 states/ UTs; Sources: RBI’s RCCS; and Authors’ calculations. 228 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Table B8: Perceptions and Expectations on Spending- Non-Essential Items (Percentage responses) Survey Current Perceptions One year ahead Expectations Round Increased Remained Decreased Net Will Will Will Net Same Response Increase Remain Decrease Response Same Sep-22 34.8 27.7 37.6 -2.8 43.7 29.2 27.0 16.7 Nov-22 37.2 30.9 31.9 5.3 46.4 30.5 23.1 23.4 Jan-23 39.1 30.0 30.9 8.2 47.7 29.2 23.1 24.6 Mar-23 40.1 27.5 32.4 7.8 48.3 26.6 25.1 23.2 May-23 41.8 29.9 28.3 13.5 47.8 28.7 23.5 24.2 Jul-23 43.7 29.8 26.5 17.2 50.0 28.0 22.1 27.9 Sep-23 44.4 31.9 23.7 20.7 53.6 28.1 18.3 35.4 Nov-23 47.2 30.5 22.3 24.9 56.1 27.5 16.4 39.6 Jan-24 46.5 30.9 22.6 23.9 56.4 26.5 17.1 39.3 Mar-24 51.8 25.5 22.8 29.0 63.8 23.2 13.0 50.8 May-24 53.6 22.3 24.1 29.5 66.3 21.3 12.5 53.9 Jul-24 53.9 21.0 25.2 28.7 67.5 19.6 12.9 54.5 Sep-24 55.6 18.3 26.1 29.4 68.2 18.7 13.0 55.2 Nov-24 57.3 18.5 24.2 33.2 68.1 19.1 12.8 55.4 Jan-25 57.3 19.7 23.1 34.2 68.1 19.6 12.4 55.7 Mar-25 58.4 19.1 22.5 35.9 69.6 18.2 12.3 57.3 Notes: Up to Jul-23, figures are based on 19 states/ UTs; from September 2023, figures are based on 26 states/ UTs; from July 2024, figures are compiled based on 31 states/ UTs; Sources: RBI’s RCCS; and Authors’ calculations. RBI Bulletin April 2025 229ARTICLE Rural Consumer Confidence in India: Bridging the Gap Annex– 6 Table C1: Average Monthly Income Wise Inflation Perceptions and Expectations Survey Current One year ahead Average Monthly Income of households Round Median IE SE Median IE SE Less than ₹5 thousand 9.0 0.68 10.4 0.28 ₹5 thousand - Less than ₹10 thousand 8.6 0.39 10.4 0.15 ₹10 thousand - Less than ₹25 thousand 9.2 0.44 10.7 0.20 Sep-22 ₹25 thousand - Less than ₹50 thousand 9.0 0.58 10.8 0.50 ₹50 thousand - Less than ₹1 lakh 9.7 0.92 11.5 1.36 ₹1 lakh and above 8.9 0.53 7.2 1.39 Less than ₹5 thousand 9.0 0.65 10.5 0.31 ₹5 thousand - Less than ₹10 thousand 8.0 0.30 10.3 0.20 ₹10 thousand - Less than ₹25 thousand 8.3 0.37 10.4 0.17 Nov-22 ₹25 thousand - Less than ₹50 thousand 8.4 0.56 10.0 0.51 ₹50 thousand - Less than ₹1 lakh 9.0 0.86 9.7 1.20 ₹1 lakh and above 7.2 0.98 10.3 0.50 Less than ₹5 thousand 8.0 0.85 9.9 0.68 ₹5 thousand - Less than ₹10 thousand 8.2 0.52 10.4 0.19 ₹10 thousand - Less than ₹25 thousand 8.3 0.41 10.6 0.15 Jan-23 ₹25 thousand - Less than ₹50 thousand 7.9 0.94 10.3 0.40 ₹50 thousand - Less than ₹1 lakh 7.8 0.93 10.0 0.57 ₹1 lakh and above 7.0 0.97 9.5 0.78 Less than ₹5 thousand 8.9 1.03 10.2 0.69 ₹5 thousand - Less than ₹10 thousand 7.2 0.49 10.1 0.40 ₹10 thousand - Less than ₹25 thousand 7.6 0.56 9.8 0.44 Mar-23 ₹25 thousand - Less than ₹50 thousand 7.5 0.88 9.9 0.67 ₹50 thousand - Less than ₹1 lakh 8.4 0.73 11.2 1.07 ₹1 lakh and above 9.4 0.82 11.3 0.74 Less than ₹5 thousand 6.7 0.80 9.5 0.59 ₹5 thousand - Less than ₹10 thousand 7.1 0.55 9.1 0.58 ₹10 thousand - Less than ₹25 thousand 7.7 0.63 10.0 0.42 May-23 ₹25 thousand - Less than ₹50 thousand 8.0 0.71 10.4 0.28 ₹50 thousand - Less than ₹1 lakh 9.1 0.94 10.2 0.95 ₹1 lakh and above 6.6 0.45 9.0 1.00 230 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Survey Current One year ahead Average Monthly Income of households Round Median IE SE Median IE SE Less than ₹5 thousand 6.4 0.51 8.3 0.51 ₹5 thousand - Less than ₹10 thousand 7.8 0.38 9.6 0.48 ₹10 thousand - Less than ₹25 thousand 7.7 0.39 9.7 0.57 Jul-23 ₹25 thousand - Less than ₹50 thousand 7.5 0.53 9.7 0.51 ₹50 thousand - Less than ₹1 lakh 5.9 0.23 9.5 1.08 ₹1 lakh and above 9.1 1.44 9.7 1.20 Less than ₹5 thousand 6.3 0.36 8.6 0.32 ₹5 thousand - Less than ₹10 thousand 7.5 0.38 9.5 0.44 ₹10 thousand - Less than ₹25 thousand 6.8 0.48 8.9 0.33 Sep-23 ₹25 thousand - Less than ₹50 thousand 7.7 0.60 9.2 0.49 ₹50 thousand - Less than ₹1 lakh 8.2 0.92 9.0 0.66 ₹1 lakh and above 6.0 0.58 5.7 0.65 Less than ₹5 thousand 6.3 0.55 10.2 0.52 ₹5 thousand - Less than ₹10 thousand 6.9 0.37 10.0 0.33 ₹10 thousand - Less than ₹25 thousand 7.3 0.29 10.0 0.28 Nov-23 ₹25 thousand - Less than ₹50 thousand 7.6 0.94 10.1 0.50 ₹50 thousand - Less than ₹1 lakh 6.8 0.69 8.5 0.64 ₹1 lakh and above 9.2 0.24 10.5 0.54 Less than ₹5 thousand 6.7 0.35 8.8 0.39 ₹5 thousand - Less than ₹10 thousand 6.5 0.28 9.2 0.37 ₹10 thousand - Less than ₹25 thousand 6.9 0.34 9.8 0.41 Jan-24 ₹25 thousand - Less than ₹50 thousand 7.6 0.56 10.3 0.32 ₹50 thousand - Less than ₹1 lakh 7.7 0.60 10.4 0.21 ₹1 lakh and above 5.9 0.41 8.8 0.76 Less than ₹5 thousand 6.7 0.50 9.7 0.42 ₹5 thousand - Less than ₹10 thousand 6.3 0.26 9.4 0.28 ₹10 thousand - Less than ₹25 thousand 6.4 0.26 9.7 0.26 Mar-24 ₹25 thousand - Less than ₹50 thousand 6.9 0.52 9.6 0.41 ₹50 thousand - Less than ₹1 lakh 6.5 0.62 8.9 0.78 ₹1 lakh and above 8.8 0.19 11.5 1.02 RBI Bulletin April 2025 231ARTICLE Rural Consumer Confidence in India: Bridging the Gap Survey Current One year ahead Average Monthly Income of households Round Median IE SE Median IE SE Less than ₹5 thousand 6.4 0.51 10.1 0.30 ₹5 thousand - Less than ₹10 thousand 6.7 0.39 9.8 0.26 ₹10 thousand - Less than ₹25 thousand 6.4 0.21 9.6 0.38 May-24 ₹25 thousand - Less than ₹50 thousand 6.2 0.44 9.4 0.65 ₹50 thousand - Less than ₹1 lakh 6.4 0.34 9.0 0.40 ₹1 lakh and above 5.4 0.30 9.3 1.59 Less than ₹5 thousand 6.2 0.28 9.4 0.43 ₹5 thousand - Less than ₹10 thousand 7.1 0.30 9.9 0.28 ₹10 thousand - Less than ₹25 thousand 7.2 0.30 9.8 0.24 Jul-24 ₹25 thousand - Less than ₹50 thousand 6.7 0.57 9.1 0.54 ₹50 thousand - Less than ₹1 lakh 7.9 0.66 10.1 0.51 ₹1 lakh and above 7.3 0.56 10.1 0.65 Less than ₹5 thousand 6.7 0.48 9.5 0.57 ₹5 thousand - Less than ₹10 thousand 6.7 0.29 9.3 0.31 ₹10 thousand - Less than ₹25 thousand 7.0 0.28 9.6 0.31 Sep-24 ₹25 thousand - Less than ₹50 thousand 7.0 0.34 9.3 0.37 ₹50 thousand - Less than ₹1 lakh 7.0 0.34 9.9 0.37 ₹1 lakh and above 6.6 0.42 9.0 0.78 Less than ₹5 thousand 7.0 0.58 9.6 0.45 ₹5 thousand - Less than ₹10 thousand 7.3 0.26 9.8 0.31 ₹10 thousand - Less than ₹25 thousand 7.2 0.27 9.8 0.28 Nov-24 ₹25 thousand - Less than ₹50 thousand 7.0 0.39 9.4 0.39 ₹50 thousand - Less than ₹1 lakh 6.0 0.35 7.8 0.55 ₹1 lakh and above 6.8 0.70 9.2 0.58 Less than ₹5 thousand 6.9 0.35 9.5 0.52 ₹5 thousand - Less than ₹10 thousand 7.0 0.25 9.4 0.30 ₹10 thousand - Less than ₹25 thousand 7.1 0.21 9.6 0.27 Jan-25 ₹25 thousand - Less than ₹50 thousand 7.6 0.35 10.0 0.28 ₹50 thousand - Less than ₹1 lakh 6.9 0.54 8.9 0.34 ₹1 lakh and above 6.6 0.52 8.7 0.64 232 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Survey Current One year ahead Average Monthly Income of households Round Median IE SE Median IE SE Less than ₹5 thousand 6.2 0.38 9.9 0.34 ₹5 thousand - Less than ₹10 thousand 6.6 0.28 8.9 0.22 Mar-25 ₹10 thousand - Less than ₹25 thousand 6.3 0.27 9.2 0.29 ₹25 thousand - Less than ₹50 thousand 7.0 0.46 9.3 0.43 ₹50 thousand - Less than ₹1 lakh 6.0 0.26 8.8 0.57 ₹1 lakh and above 6.3 0.45 8.0 0.47 Notes: 1. Up to Jul-23, figures are based on 19 states/ UTs; from September 2023, figures are based on 26 states/ UTs; from July 2024, figures are compiled based on 31 states/ UTs; 2. The table provides estimates and standard errors for quantitative responses. Sources: RBI’s RCCS; and Authors’ calculations. RBI Bulletin April 2025 233ARTICLE Rural Consumer Confidence in India: Bridging the Gap Table C2: Occupation Wise Inflation Perceptions and Expectations Survey Current One year ahead Occupation Categories of respondents Round Median IE SE Median IE SE Land Owning Farmers^ 10.0 0.63 11.4 1.06 Daily Worker 10.1 0.34 11.5 0.61 Self Employed 9.7 0.53 10.8 0.50 Sep-22 Salaried Employee 10.0 0.33 11.3 0.71 Homemaker 8.2 0.57 10.1 0.42 Retired Person 9.2 0.69 12.3 1.36 Others 9.2 0.66 10.8 0.43 Land Owning Farmers^ 9.5 0.75 11.1 0.89 Daily Worker 8.4 0.63 10.3 0.36 Self Employed 9.0 0.78 11.4 0.77 Nov-22 Salaried Employee 8.7 0.56 10.6 0.54 Homemaker 8.3 0.30 10.3 0.26 Retired Person 7.2 0.38 9.1 0.48 Others 7.9 0.54 10.2 0.47 Land Owning Farmers^ 8.9 0.84 10.8 0.41 Daily Worker 9.4 0.80 11.2 0.81 Self Employed 8.0 0.77 9.9 0.59 Jan-23 Salaried Employee 7.7 0.49 10.4 0.20 Homemaker 7.6 0.50 10.2 0.17 Retired Person 8.4 0.83 10.5 0.58 Others 8.3 0.72 10.4 0.24 Land Owning Farmers^ 9.6 0.85 10.6 1.14 Daily Worker 7.5 0.87 10.0 0.55 Self Employed 8.7 1.02 10.0 0.73 Mar-23 Salaried Employee 6.6 0.51 9.3 0.58 Homemaker 7.4 0.72 9.9 0.57 Retired Person 8.5 0.96 10.0 0.95 Others 7.2 0.52 9.9 0.44 Daily Worker 7.5 0.81 9.8 0.65 Self Employed 7.3 0.64 9.6 0.52 Salaried Employee 8.3 0.60 10.4 0.24 May-23 Homemaker 7.0 0.76 9.5 0.70 Retired Person 6.9 0.65 9.3 0.75 Others 7.2 0.40 9.6 0.60 234 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Survey Current One year ahead Occupation Categories of respondents Round Median IE SE Median IE SE Daily Worker 7.0 0.53 9.3 0.53 Self Employed 7.4 0.45 9.3 0.65 Salaried Employee 8.2 0.54 10.5 0.46 Jul-23 Homemaker 6.9 0.47 9.0 0.60 Retired Person 6.9 0.93 9.3 1.01 Others 7.8 0.41 9.8 0.43 Daily Worker 6.9 0.51 9.3 0.54 Self Employed 6.9 0.41 8.6 0.34 Salaried Employee 7.5 0.41 9.0 0.34 Sep-23 Homemaker 7.3 0.48 9.3 0.47 Retired Person 5.9 0.17 8.2 0.25 Others 6.7 0.35 8.8 0.32 Daily Worker 7.2 0.54 10.5 0.35 Self Employed 6.9 0.52 10.1 0.25 Salaried Employee 7.0 0.36 9.4 0.44 Nov-23 Homemaker 7.0 0.61 9.6 0.53 Retired Person 6.8 0.55 10.1 0.33 Others 6.5 0.43 9.8 0.49 Daily Worker 6.7 0.32 9.3 0.54 Self Employed 7.5 0.41 9.9 0.38 Salaried Employee 6.7 0.43 9.3 0.60 Jan-24 Homemaker 6.2 0.24 8.8 0.34 Retired Person 7.6 0.55 10.2 0.54 Others 6.6 0.40 9.5 0.48 Daily Worker 6.4 0.34 9.8 0.29 Self Employed 6.3 0.27 9.5 0.33 Salaried Employee 6.8 0.39 9.9 0.26 Mar-24 Homemaker 6.8 0.34 9.7 0.32 Retired Person 6.5 0.53 9.6 0.48 Others 6.4 0.35 9.0 0.44 RBI Bulletin April 2025 235ARTICLE Rural Consumer Confidence in India: Bridging the Gap Survey Current One year ahead Occupation Categories of respondents Round Median IE SE Median IE SE Daily Worker 6.4 0.31 9.5 0.39 Self Employed 6.4 0.38 9.5 0.41 Salaried Employee 6.4 0.41 9.8 0.45 May-24 Homemaker 6.2 0.24 9.8 0.30 Retired Person 6.7 0.68 9.1 1.01 Others 6.2 0.37 9.9 0.31 Daily Worker 6.8 0.33 9.7 0.36 Self Employed 7.5 0.34 9.8 0.29 Salaried Employee 6.9 0.49 9.6 0.41 Jul-24 Homemaker 6.5 0.31 9.9 0.25 Retired Person 6.8 0.65 9.4 0.64 Others 7.1 0.36 10.0 0.28 Daily Worker 6.6 0.36 9.5 0.47 Self Employed 7.1 0.39 9.3 0.30 Salaried Employee 6.9 0.39 9.8 0.35 Sep-24 Homemaker 6.3 0.30 9.4 0.34 Retired Person 7.6 0.60 10.0 0.63 Others 7.0 0.33 9.7 0.38 Daily Worker 7.4 0.34 9.9 0.37 Self Employed 7.3 0.29 9.7 0.41 Salaried Employee 7.6 0.33 9.3 0.33 Nov-24 Homemaker 6.8 0.27 9.5 0.31 Retired Person 8.7 0.97 10.5 1.39 Others 7.1 0.36 9.4 0.47 Daily Worker 7.0 0.43 9.4 0.45 Self Employed 7.1 0.37 9.3 0.32 Salaried Employee 7.6 0.35 10.0 0.30 Jan-25 Homemaker 6.7 0.24 9.6 0.31 Retired Person 9.3 0.61 9.9 0.66 Others 7.2 0.25 9.1 0.33 236 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Survey Current One year ahead Occupation Categories of respondents Round Median IE SE Median IE SE Daily Worker 6.6 0.39 9.3 0.36 Self Employed 6.9 0.38 9.0 0.34 Salaried Employee 6.5 0.35 9.1 0.32 Mar-25 Homemaker 6.4 0.29 9.5 0.31 Retired Person 7.6 0.83 9.5 0.79 Others 6.1 0.25 8.8 0.29 Notes: 1. Up to Jul-23, figures are based on 19 states/ UTs; from September 2023, figures are based on 26 states/ UTs; from July 2024, figures are compiled based on 31 states/ UTs; 2. ^: Discontinued since May 2023 3. The table provides estimates and standard errors for quantitative responses. Sources: RBI’s RCCS; and Authors’ calculations. RBI Bulletin April 2025 237ARTICLE Rural Consumer Confidence in India: Bridging the Gap Annex– 7 Table D1: Income Group Wise Consumer Confidence Indices Current Situation Future Expectations Round Monthly Average Household Income Bracket Index (CSI) Index (FEI) Less than ₹10 thousand 76.3 110.1 ₹10 thousand - Less than ₹25 thousand 86.4 116.4 Sep-22 ₹25 thousand - Less than ₹50 thousand 93.2 120.4 ₹50 thousand and above 102.1 124.8 Aggregate 82.9 114.2 Less than ₹10 thousand 80.7 109.6 ₹10 thousand - Less than ₹25 thousand 87.7 117.5 Nov-22 ₹25 thousand - Less than ₹50 thousand 94.6 121.6 ₹50 thousand and above 103.7 128.0 Aggregate 86.2 115.1 Less than ₹10 thousand 82.4 113.7 ₹10 thousand - Less than ₹25 thousand 92.2 121.6 Jan-23 ₹25 thousand - Less than ₹50 thousand 97.0 125.7 ₹50 thousand and above 104.2 129.3 Aggregate 88.8 118.9 Less than ₹10 thousand 83.5 111.5 ₹10 thousand - Less than ₹25 thousand 91.7 119.4 Mar-23 ₹25 thousand - Less than ₹50 thousand 102.9 127.7 ₹50 thousand and above 109.9 127.1 Aggregate 89.8 117.0 Less than ₹10 thousand 85.3 114.0 ₹10 thousand - Less than ₹25 thousand 92.6 120.4 May-23 ₹25 thousand - Less than ₹50 thousand 99.1 124.8 ₹50 thousand and above 108.6 124.9 Aggregate 90.5 118.1 Less than ₹10 thousand 86.4 114.1 ₹10 thousand - Less than ₹25 thousand 94.8 120.3 Jul-23 ₹25 thousand - Less than ₹50 thousand 101.0 123.8 ₹50 thousand and above 107.8 124.4 Aggregate 91.8 117.8 238 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Current Situation Future Expectations Round Monthly Average Household Income Bracket Index (CSI) Index (FEI) Less than ₹10 thousand 91.0 118.5 ₹10 thousand - Less than ₹25 thousand 97.3 123.5 Sep-23 ₹25 thousand - Less than ₹50 thousand 105.0 128.0 ₹50 thousand and above 107.9 132.1 Aggregate 95.1 121.6 Less than ₹10 thousand 88.9 117.7 ₹10 thousand - Less than ₹25 thousand 98.1 125.4 Nov-23 ₹25 thousand - Less than ₹50 thousand 105.1 126.0 ₹50 thousand and above 111.4 129.3 Aggregate 94.6 121.7 Less than ₹10 thousand 92.1 120.8 ₹10 thousand - Less than ₹25 thousand 94.3 122.8 Jan-24 ₹25 thousand - Less than ₹50 thousand 98.2 126.7 ₹50 thousand and above 112.9 131.6 Aggregate 96.5 124.3 Less than ₹10 thousand 96.4 122.7 ₹10 thousand - Less than ₹25 thousand 98.5 124.6 Mar-24 ₹25 thousand - Less than ₹50 thousand 102.1 127.7 ₹50 thousand and above 113.6 133.0 Aggregate 100.4 125.9 Less than ₹10 thousand 94.8 120.4 ₹10 thousand - Less than ₹25 thousand 96.3 122.6 May-24 ₹25 thousand - Less than ₹50 thousand 100.2 127.6 ₹50 thousand and above 108.7 127.5 Aggregate 98.8 124.7 Less than ₹10 thousand 90.3 117.7 ₹10 thousand - Less than ₹25 thousand 91.5 119.9 Jul-24 ₹25 thousand - Less than ₹50 thousand 98.4 124.6 ₹50 thousand and above 111.5 130.7 Aggregate 96.1 122.4 RBI Bulletin April 2025 239ARTICLE Rural Consumer Confidence in India: Bridging the Gap Current Situation Future Expectations Round Monthly Average Household Income Bracket Index (CSI) Index (FEI) Less than ₹10 thousand 91.3 120.3 ₹10 thousand - Less than ₹25 thousand 93.0 123.0 Sep-24 ₹25 thousand - Less than ₹50 thousand 99.0 125.1 ₹50 thousand and above 108.3 127.4 Aggregate 96.9 123.4 Less than ₹10 thousand 90.2 119.7 ₹10 thousand - Less than ₹25 thousand 92.2 121.9 Nov-24 ₹25 thousand - Less than ₹50 thousand 98.8 126.5 ₹50 thousand and above 110.8 130.3 Aggregate 96.4 123.9 Less than ₹10 thousand 92.1 119.6 ₹10 thousand - Less than ₹25 thousand 94.3 121.8 Jan-25 ₹25 thousand - Less than ₹50 thousand 100.1 127.3 ₹50 thousand and above 113.6 131.1 Aggregate 98.0 124.1 Less than ₹10 thousand 94.3 121.7 ₹10 thousand - Less than ₹25 thousand 96.1 123.4 Mar-25 ₹25 thousand - Less than ₹50 thousand 101.6 127.7 ₹50 thousand and above 114.3 133.0 Aggregate 100.1 125.9 Notes: 1. Up to Jul-23, figures are based on 19 states/ UTs; from September 2023, figures are based on 26 states/ UTs; from July 2024, figures are compiled based on 31 states/ UTs; 2. Less than ₹5 thousand and ₹5 thousand - Less than ₹10 thousand monthly income groups are merged. Similarly, ₹50 thousand - Less than ₹1 lakh and ₹1 lakh and above monthly income groups are merged. Sources: RBI’s RCCS; and Authors’ calculations. 240 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Table D2: Occupation Group Wise Consumer Confidence Indices Current Situation Index Future Expectations Round Occupation Category (CSI) Index (FEI) Daily Workers 80.2 111.5 Self Employed 81.7 110.8 Salaried Employees 89.0 118.5 Sep-22 Homemakers 83.1 118.2 Retired Persons 81.4 105.4 Others 81.2 114.5 Aggregate 82.9 114.2 Daily Workers 81.8 109.6 Self Employed 83.7 111.2 Salaried Employees 91.4 116.9 Nov-22 Homemakers 87.9 119.7 Retired Persons 85.0 110.6 Others 85.1 117.2 Aggregate 86.2 115.1 Daily Workers 82.8 112.1 Self Employed 88.4 116.0 Salaried Employees 93.7 122.4 Jan-23 Homemakers 90.5 124.1 Retired Persons 85.9 111.8 Others 87.0 117.5 Aggregate 88.8 118.9 Daily Workers 86.2 112.9 Self Employed 89.8 113.8 Salaried Employees 95.7 119.5 Mar-23 Homemakers 88.8 121.0 Retired Persons 97.6 113.9 Others 86.2 117.4 Aggregate 89.8 117.0 Daily Workers 83.2 111.5 Self Employed 90.7 117.1 Salaried Employees 98.6 120.9 May-23 Homemakers 90.0 122.1 Retired Persons 90.5 111.9 Others 90.5 118.1 Aggregate 90.5 118.1 RBI Bulletin April 2025 241ARTICLE Rural Consumer Confidence in India: Bridging the Gap Current Situation Index Future Expectations Round Occupation Category (CSI) Index (FEI) Daily Workers 86.4 114.7 Self Employed 92.2 117.2 Salaried Employees 98.9 121.4 Jul-23 Homemakers 91.1 119.1 Retired Persons 88.1 108.3 Others 93.0 118.9 Aggregate 91.8 117.8 Daily Workers 91.7 118.0 Self Employed 95.1 120.5 Salaried Employees 101.2 124.0 Sep-23 Homemakers 93.5 123.4 Retired Persons 98.3 119.4 Others 95.7 124.3 Aggregate 95.1 121.6 Daily Workers 89.3 117.8 Self Employed 94.8 120.6 Salaried Employees 102.1 124.1 Nov-23 Homemakers 94.0 124.7 Retired Persons 96.5 116.2 Others 94.7 121.5 Aggregate 94.6 121.7 Daily Workers 89.4 118.1 Self Employed 98.1 123.8 Salaried Employees 103.5 126.9 Jan-24 Homemakers 95.6 128.7 Retired Persons 98.4 115.3 Others 96.9 123.2 Aggregate 96.5 124.3 Daily Workers 95.7 122.4 Self Employed 101.2 123.8 Salaried Employees 107.0 127.7 Mar-24 Homemakers 100.2 129.1 Retired Persons 99.5 119.3 Others 98.8 127.8 Aggregate 100.4 125.9 242 RBI Bulletin April 2025Rural Consumer Confidence in India: Bridging the Gap ARTICLE Current Situation Index Future Expectations Round Occupation Category (CSI) Index (FEI) Daily Workers 93.6 122.1 Self Employed 101.2 123.9 Salaried Employees 103.9 126.7 May-24 Homemakers 98.8 128.3 Retired Persons 105.4 123.1 Others 94.4 120.7 Aggregate 98.8 124.7 Daily Workers 90.7 118.7 Self Employed 98.7 122.6 Salaried Employees 103.1 124.5 Jul-24 Homemakers 95.3 124.7 Retired Persons 96.3 119.9 Others 93.2 121.1 Aggregate 96.1 122.4 Daily Workers 92.0 121.2 Self Employed 97.0 123.1 Salaried Employees 104.4 125.3 Sep-24 Homemakers 96.6 125.4 Retired Persons 98.8 116.3 Others 95.3 123.0 Aggregate 96.9 123.4 Daily Workers 90.2 122.3 Self Employed 97.3 122.5 Salaried Employees 105.4 128.4 Nov-24 Homemakers 94.6 125.0 Retired Persons 96.9 116.2 Others 96.1 123.4 Aggregate 96.4 123.9 Daily Workers 91.9 121.6 Self Employed 99.1 121.5 Salaried Employees 105.1 125.6 Jan-25 Homemakers 97.5 128.2 Retired Persons 96.5 117.9 Others 98.1 123.5 Aggregate 98.0 124.1 RBI Bulletin April 2025 243ARTICLE Rural Consumer Confidence in India: Bridging the Gap Current Situation Index Future Expectations Round Occupation Category (CSI) Index (FEI) Daily Workers 95.5 124.4 Self Employed 100.2 123.0 Salaried Employees 107.8 127.5 Mar-25 Homemakers 97.8 129.1 Retired Persons 101.7 122.2 Others 101.8 127.2 Aggregate 100.1 125.9 Notes: 1. Up to Jul-23, figures are based on 19 states/ UTs; from September 2023, figures are based on 26 states/ UTs; from July 2024, figures are compiled based on 31 states/ UTs; 2. Land owning farmers and the self-employed categories are merged up to March 2023. Land owning farmers category is discontinued since May 2023. Sources: RBI’s RCCS; and Authors’ calculations. 244 RBI Bulletin April 2025CURRENT STATISTICS Select Economic Indicators Reserve Bank of India Money and Banking Prices and Production Government Accounts and Treasury Bills Financial Markets External Sector Payment and Settlement Systems Occasional SeriesCURRENT STATISTICS Contents No. Title Page 1 Select Economic Indicators 247 Reserve Bank of India 2 RBI – Liabilities and Assets 248 3 Liquidity Operations by RBI 249 4 Sale/ Purchase of U.S. Dollar by the RBI 250 4A Maturity Breakdown (by Residual Maturity) of Outstanding Forwards of RBI (US$ Million) 251 5 RBI's Standing Facilities 251 Money and Banking 6 Money Stock Measures 252 7 Sources of Money Stock (M) 253 3 8 Monetary Survey 254 9 Liquidity Aggregates 255 10 Reserve Bank of India Survey 256 11 Reserve Money – Components and Sources 256 12 Commercial Bank Survey 257 13 Scheduled Commercial Banks' Investments 257 14 Business in India – All Scheduled Banks and All Scheduled Commercial Banks 258 15 Deployment of Gross Bank Credit by Major Sectors 259 16 Industry-wise Deployment of Gross Bank Credit 260 17 State Co-operative Banks Maintaining Accounts with the Reserve Bank of India 261 Prices and Production 18 Consumer Price Index (Base: 2012=100) 262 19 Other Consumer Price Indices 262 20 Monthly Average Price of Gold and Silver in Mumbai 262 21 Wholesale Price Index 263 22 Index of Industrial Production (Base: 2011-12=100) 267 Government Accounts and Treasury Bills 23 Union Government Accounts at a Glance 267 24 Treasury Bills – Ownership Pattern 268 25 Auctions of Treasury Bills 268 Financial Markets 26 Daily Call Money Rates 269 27 Certificates of Deposit 270 28 Commercial Paper 270 29 Average Daily Turnover in Select Financial Markets 270 30 New Capital Issues by Non-Government Public Limited Companies 271 RBI Bulletin April 2025 245CURRENT STATISTICS No. Title Page External Sector 31 Foreign Trade 272 32 Foreign Exchange Reserves 272 33 Non-Resident Deposits 272 34 Foreign Investment Inflows 275 35 Outward Remittances under the Liberalised Remittance Scheme (LRS) for Resident Individuals 275 36 Indices of Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER) of the Indian Rupee 274 37 External Commercial Borrowings (ECBs) – Registrations 275 38 India’s Overall Balance of Payments (US $ Million) 276 39 India's Overall Balance of Payments (` Crore) 277 40 Standard Presentation of BoP in India as per BPM6 (US $ Million) 278 41 Standard Presentation of BoP in India as per BPM6 (` Crore) 279 42 India’s International Investment Position 280 Payment and Settlement Systems 43 Payment System Indicators 281 Occasional Series 44 Small Savings 283 45 Ownership Pattern of Central and State Governments Securities 284 46 Combined Receipts and Disbursements of the Central and State Governments 285 47 Financial Accommodation Availed by State Governments under various Facilities 286 48 Investments by State Governments 287 49 Market Borrowings of State Governments 288 50 (a) Flow of Financial Assets and Liabilities of Households - Instrument-wise 289 50 (b) Stocks of Financial Assets and Liabilities of Households- Select Indicators 292 Notes: .. = Not available. – = Nil/Negligible. P = Preliminary/Provisional. PR = Partially Revised. 246 RBI Bulletin April 2025CURRENT STATISTICS No. 1: Select Economic Indicators 2023-24 2024-25 Item 2023-24 Q2 Q3 Q2 Q3 1 2 3 4 5 1 Real Sector (% Change) 1.1 GVA at Basic Prices 8.6 9.2 8.0 5.8 6.2 1.1.1 Agriculture 2.7 3.7 1.5 4.1 5.6 1.1.2 Industry 11.0 15.3 12.6 2.0 3.5 1.1.3 Services 9.2 8.3 8.5 7.4 7.3 1.1a Final Consumption Expenditure 5.9 5.1 5.3 5.6 7.1 1.1b Gross Fixed Capital Formation 8.8 11.7 9.3 5.8 5.7 2024 2025 2023-24 Jan. Feb. Jan. Feb. 1 2 3 4 5 1.2 Index of Industrial Production 5.9 4.2 5.6 5.2 2.9 2 Money and Banking (% Change) 2.1 Scheduled Commercial Banks 2.1.1 Deposits 12.9 12.5 12.5 11.7 11.1 (13.5) (13.2) (13.1) (11.4) (10.8) 2.1.2 Credit # 16.3 16.1 16.6 12.9 12.6 (20.2) (20.3) (20.5) (11.8) (11.6) 2.1.2.1 Non-food Credit # 16.3 16.2 16.6 12.9 12.6 (20.2) (20.4) (20.6) (11.8) (11.5) 2.1.3 Investment in Govt. Securities 11.1 13.2 11.6 10.4 10.2 (12.8) (15.0) (13.3) (9.6) (9.4) 2.2 Money Stock Measures 2.2.1 Reserve Money (M0) 5.6 6.3 6.1 4.4 5.3 2.2.2 Broad Money (M3) 11.1 11.0 10.9 9.6 9.6 (11.6) (11.5) (11.4) (9.3) (9.4) 3 Ratios (%) 3.1 Cash Reserve Ratio 4.50 4.50 4.50 4.00 4.00 3.2 Statutory Liquidity Ratio 18.00 18.00 18.00 18.00 18.00 3.3 Cash-Deposit Ratio 5.0 5.1 4.9 4.5 4.5 (5.0) (5.1) (4.9) (4.5) (4.5) 3.4 Credit-Deposit Ratio 78.1 77.7 78.0 78.5 78.7 (80.3) (80.0) (80.2) (80.3) (80.4) 3.5 Incremental Credit-Deposit Ratio # 95.8 95.6 97.8 83.2 85.0 (113.4) (117.5) (117.5) (80.5) (82.1) 3.6 Investment-Deposit Ratio 29.5 29.5 29.6 29.4 29.4 (29.8) (29.8) (29.9) (29.5) (29.5) 3.7 Incremental Investment-Deposit Ratio 25.8 24.5 26.5 27.6 27.8 (28.4) (27.7) (29.3) (26.2) (26.5) 4 Interest Rates (%) 4.1 Policy Repo Rate 6.50 6.50 6.50 6.50 6.25 4.2 Fixed Reverse Repo Rate 3.35 3.35 3.35 3.35 3.35 4.3 Standing Deposit Facility (SDF) Rate * 6.25 6.25 6.25 6.25 6.00 4.4 Marginal Standing Facility (MSF) Rate 6.75 6.75 6.75 6.75 6.50 4.5 Bank Rate 6.75 6.75 6.75 6.75 6.50 4.6 Base Rate 9.10/10.25 9.10/10.25 9.10/10.25 9.10/10.40 9.10/10.40 4.7 MCLR (Overnight) 8.00/8.60 8.00/8.60 8.00/8.60 8.15/8.45 8.15/8.45 4.8 Term Deposit Rate >1 Year 6.50/7.25 6.50/7.25 6.50/7.25 6.00/7.25 6.00/7.25 4.9 Savings Deposit Rate 2.70/3.00 2.70/3.00 2.70/3.00 2.70/3.00 2.70/3.00 4.10 Call Money Rate (Weighted Average) 6.85 6.77 6.64 6.57 6.33 4.11 91-Day Treasury Bill (Primary) Yield - 7.04 6.96 6.56 6.45 4.12 182-Day Treasury Bill (Primary) Yield 7.28 7.18 7.17 6.67 6.60 4.13 364-Day Treasury Bill (Primary) Yield 7.31 7.15 7.12 6.63 6.54 4.14 10-Year G-Sec Par Yield (FBIL) 7.31 7.15 - 6.71 6.73 5 Reference Rate and Forward Premia 5.1 INR-US$ Spot Rate (Rs. Per Foreign Currency) 83.37 83.12 82.89 86.64 87.40 5.2 INR-Euro Spot Rate (Rs. Per Foreign Currency) 90.22 90.42 89.71 90.01 90.78 5.3 Forward Premia of US$ 1-month (%) 1.00 1.30 1.19 2.80 3.21 3-month (%) 1.11 1.59 1.51 2.69 2.46 6-month (%) 1.31 1.60 1.50 2.30 2.20 6 Inflation (%) 6.1 All India Consumer Price Index 5.4 5.1 5.1 4.3 3.6 6.2 Consumer Price Index for Industrial Workers 5.19 4.6 4.9 3.1 2.6 6.3 Wholesale Price Index -0.7 0.3 0.2 2.5 2.4 6.3.1 Primary Articles 3.5 4.1 4.6 4.6 2.8 6.3.2 Fuel and Power -4.7 -0.4 -1.7 -1.9 -0.7 6.3.3 Manufactured Products -1.7 -1.2 -1.3 2.6 2.9 7 Foreign Trade (% Change) 7.1 Imports -5.3 2.0 13.7 10.3 -16.3 7.2 Exports -3.1 4.3 11.9 -2.5 -10.9 Note : Financial Benchmark India Pvt. Ltd. (FBIL) has commenced publication of the G-Sec benchmarks with effect from March 31, 2018 as per RBI circularFMRD.DIRD. 7/14.03.025/2017-18 dated March 31, 2018. FBIL has started dissemination of reference rates w.e.f. July 10, 2018. #: Bank credit growth and related ratios for all fortnights from December 3, 2021 to November 18, 2022 are adjusted for past reporting errors by select scheduled commercial banks (SCBs). Figures in parentheses include the impact of merger of a non-bank with a bank. *: As per Press Release No. 2022-2023/41 dated April 08, 2022. RBI Bulletin April 2025 247CURRENT STATISTICS Reserve Bank of India No. 2: RBI - Liabilities and Assets * (₹ Crore) Item As on the Last Friday/ Friday 2023-24 2024 2025 Mar. Feb. 28 Mar. 07 Mar. 14 Mar. 21 Mar. 28 1 2 3 4 5 6 7 1 Issue Department 1.1 Liabilities 1.1.1 Notes in Circulation 3482333 3482333 3615574 3647904 3664012 3678235 3683836 1.1.2 Notes held in Banking Department 11 11 14 11 14 10 11 1.1/1.2 Total Liabilities (Total Notes Issued) or Assets 3482344 3482344 3615588 3647915 3664026 3678245 3683847 1.2 Assets 1.2.1 Gold 162996 162996 226730 228343 228871 234862 235379 1.2.2 Foreign Securities 3318885 3318885 3388603 3419210 3434861 3442976 3448129 1.2.3 Rupee Coin 463 463 255 362 293 407 340 1.2.4 Government of India Rupee Securities - - - - - - - 2 Banking Department 2.1 Liabilities 2.1.1 Deposits 1782333 1782333 1445017 1451336 1547433 1650887 1709285 2.1.1.1 Central Government 101 101 101 100 100 101 100 2.1.1.2 Market Stabilisation Scheme - - - - - 2.1.1.3 State Governments 42 42 42 42 42 42 42 2.1.1.4 Scheduled Commercial Banks 1008618 1008618 927189 887267 920156 882415 943060 2.1.1.5 Scheduled State Co-operative Banks 10092 10092 7452 7710 7872 7527 7776 2.1.1.6 Non-Scheduled State Co-operative Banks 6412 6412 4814 5191 5473 5189 5963 2.1.1.7 Other Banks 48725 48725 46630 46007 46144 46820 46963 2.1.1.8 Others 545400 545400 363484 405365 471847 601877 593085 2.1.1.9 Financial Institution Outside India 162944 162944 95305 99655 95799 106916 112296 2.1.2 Other Liabilities 1804747 1804747 2173208 2196579 2201871 2178906 2150508 2.1/2.2 Total Liabilities or Assets 3587080 3587080 3618225 3647915 3749304 3829793 3859793 2.2 Assets 2.2.1 Notes and Coins 11 11 14 11 14 10 11 2.2.2 Balances Held Abroad 1480408 1480408 1402695 1457309 1447300 1393592 1413591 2.2.3 Loans and Advances 2.2.3.1 Central Government - - - - - - - 2.2.3.2 State Governments 2300 2300 22937 39684 23828 19192 26284 2.2.3.3 Scheduled Commercial Banks 266021 266021 229480 183436 256883 311466 251984 2.2.3.4 Scheduled State Co-op.Banks - - - - - - - 2.2.3.5 Industrial Dev. Bank of India - - - - - - - 2.2.3.6 NABARD - - - - - - - 2.2.3.7 EXIM Bank - - - - - - - 2.2.3.8 Others 12398 12398 28827 25071 29527 33761 36426 2.2.3.9 Financial Institution Outside India 162650 162650 94847 99405 95285 106639 111768 2.2.4 Bills Purchased and Discounted 2.2.4.1 Internal - - - - - - - 2.2.4.2 Government Treasury Bills - - - - - - - 2.2.5 Investments 1365425 1365425 1401615 1402259 1454050 1510787 1560630 2.2.6 Other Assets 297868 297868 437810 440740 442418 454345 459101 2.2.6.1 Gold 272028 272028 414488 417437 418402 429357 429510 * Data are provisional. 248 RBI Bulletin April 2025CURRENT STATISTICS No. 3: Liquidity Operations by RBI (₹ Crore) Date Standing OMO (Outright) Net Injection (+)/ Liquidity Absorption (-) Liquidity Adjustment Facility Facilities (1+3+5+7+9-2-4-6 -8) Sale Purchase Variable Variable Reverse Rate Repo Rate MSF SDF Repo Reverse Repo Repo 1 2 3 4 5 6 7 8 9 10 Feb. 1, 2025 - - - - 517 119511 - - - -118994 Feb. 2, 2025 - - - - 202 99712 - - - -99510 Feb. 3, 2025 - - 48785 - 1170 113121 - - - -63166 Feb. 4, 2025 - - 25001 - 378 158816 - - - -133437 Feb. 5, 2025 - - 21180 - 408 147577 -658 - - -126647 Feb. 6, 2025 - - 21674 - 163 122506 -570 - - -101239 Feb. 7, 2025 - - 183023 - 13020 96591 - - - 99452 Feb. 8, 2025 - - - - 5172 43861 - - - -38689 Feb. 9, 2025 - - - - 5686 47110 - - - -41424 Feb. 10, 2025 - - 201310 - 4125 67439 - - - 137996 Feb. 11, 2025 - - 200036 - 3498 71434 428 - - 132528 Feb. 12, 2025 - - 193865 - 2561 48110 - - - 148316 Feb. 13, 2025 - - 235619 - 1988 54539 - - - 183068 Feb. 14, 2025 - - 225019 - 641 71090 798 - 40000 195368 Feb. 15, 2025 - - - - 422 101167 - - - -100745 Feb. 16, 2025 - - - - 91 84644 - - - -84553 Feb. 17, 2025 - - 157427 - 1471 112137 - - - 46761 Feb. 18, 2025 - - 71773 - 1359 97359 -460 - - -24687 Feb. 19, 2025 - - - - 6529 85144 - - - -78615 Feb. 20, 2025 - - 132938 - 760 137648 - - - -3950 Feb. 21, 2025 - - 193924 - 500 135990 - - 40000 98434 Feb. 22, 2025 - - - - 285 64888 - - - -64603 Feb. 23, 2025 - - - - 286 64977 - - - -64691 Feb. 24, 2025 - - 36775 - 2400 78791 - - - -39616 Feb. 25, 2025 - - 75012 - 895 112841 - - - -36934 Feb. 26, 2025 - - - - 443 101569 - - - -101126 Feb. 27, 2025 - - 49955 - 1334 103098 - - - -51809 Feb. 28, 2025 - - 16258 - 8943 97238 - - - -72037 RBI Bulletin April 2025 249CURRENT STATISTICS No. 4: Sale/ Purchase of U.S. Dollar by the RBI i) Operations in onshore / offshore OTC segment Item 2024 2025 2023-24 Feb. Jan. Feb. 1 2 3 4 1 Net Purchase/ Sale of Foreign Currency (US $ Million) (1.1-1.2) 41271 8557 -11139 -1621 1.1 Purchase (+) 194296 8557 49145 45030 1.2 Sale (–) 153025 0 60284 46651 2 ₹ equivalent at contract rate (₹ Crores) 339528 70981 -95388 -14024 3 Cumulative (over end-March) (US $ Million) 41271 28022 -47245 -48866 (₹ Crore) 339528 229505 -401795 -415819 4 Outstanding Net Forward Sales (-)/ Purchase (+) at the end of month (US -541 9694 -77528 -88753 $ Million) ii) Operations in currency futures segment Item 2024 2025 2023-24 Feb. Jan. Feb. 1 2 3 4 1 Net Purchase/ Sale of Foreign Currency (US $ Million) (1.1-1.2) 0 0 0 0 1.1 Purchase (+) 7930 0 3703 4071 1.2 Sale (–) 7930 0 3703 4071 2 Outstanding Net Currency Futures Sales (-)/ Purchase (+) at the end of -1080 0 -2683 -1002 month (US $ Million) 250 RBI Bulletin April 2025CURRENT STATISTICS No. 4 A : Maturity Breakdown (by Residual Maturity) of Outstanding Forwards of RBI (US $ Million) Item As on February 28 , 2025 Long (+) Short (-) Net (1-2) 1 2 3 1. Upto 1 month 10062 24808 -14746 2. More than 1 month and upto 3 months 0 18830 -18830 3. More than 3 months and upto 1 year 0 45115 -45115 4. More than 1 year 0 10062 -10062 Total (1+2+3+4) 10062 98815 -88753 No. 5: RBI’s Standing Facilities (₹ Crore) Item As on the Last Reporting Friday 2023-24 2024 2025 Mar. 22 Oct. 18 Nov. 29 Dec. 27 Jan. 24 Feb. 21 Mar. 21 1 2 3 4 5 6 7 8 1 MSF 49906 49906 4216 18513 31127 3232 500 9961 2 Export Credit Refinance for Scheduled Banks 2.1 Limit - - - - - - - - 2.2 Outstanding - - - - - - - - 3 Liquidity Facility for PDs 3.1 Limit 9900 9900 9900 9900 9900 9900 9900 9900 3.2 Outstanding 9810 9810 7223 8428 8459 9556 9096 9517 4 Others 4.1 Limit 76000 76000 76000 76000 76000 76000 76000 76000 4.2 Outstanding - - - - - - - - 5 Total Outstanding (1+2.2+3.2+4.2) 59716 59716 11439 26941 39586 12788 9596 19478 RBI Bulletin April 2025 251CURRENT STATISTICS Money and Banking No. 6: Money Stock Measures (₹ Crore) Item Outstanding as on March 31/last reporting Fridays of the month/ reporting Fridays 2023-24 2024 2025 Feb. 23 Jan. 24 Feb. 07 Feb. 21 1 2 3 4 5 1 Currency with the Public (1.1 + 1.2 + 1.3 – 1.4) 3410276 3361633 3503602 3537301 3558434 1.1 Notes in Circulation 3477795 3423064 3563413 3595771 3614508 1.2 Circulation of Rupee Coin 32689 32455 34940 35274 35274 1.3 Circulation of Small Coins 743 743 743 743 743 1.4 Cash on Hand with Banks 101185 94830 96376 95355 92995 2 Deposit Money of the Public 2681424 2594337 2756006 2745975 2778287 2.1 Demand Deposits with Banks 2586888 2510518 2651712 2634048 2664975 2.2 'Other' Deposits with Reserve Bank 94536 83819 104294 111927 113312 3 M1 (1 + 2) 6091700 5955970 6259608 6283276 6336721 4 Post Office Saving Bank Deposits 195777 191692 200889 200889 200889 5 M2 (3 + 4) 6287477 6147662 6460497 6484165 6537610 6 Time Deposits with Banks 18739918 18538143 20369151 20588910 20515359 (18848160) (18650930) (20433390) (20651913) (20577221) 7 M3 (3 + 6) 24831618 24494113 26628759 26872185 26852080 (24939860) (24606900) (26692999) (26935188) (26913942) 8 Total Post Office Deposits 1313366 1298796 1379283 1379283 1379283 9 M4 (7 + 8) 26144984 25792909 28008042 28251468 28231363 (26253226) (25905696) (28072282) (28314471) (28293225) Figures in parentheses include the impact of merger of a non-bank with a bank. 252 RBI Bulletin April 2025CURRENT STATISTICS No. 7 : Sources of Money Stock (M) 3 (₹ Crore) Sources Outstanding as on March 31/last reporting Fridays of the month/reporting Fridays 2023-24 2024 2025 Feb. 23 Jan. 24 Feb. 07 Feb. 21 1 2 3 4 5 1 Net Bank Credit to Government 7512016 7223794 7937526 8156863 8099668 1 Net Bank Credit to Government (Including Merger) (7603571) (7315467) (7988402) (8207744) (8150550) 1.1 RBI’s net credit to Government (1.1.1–1.1.2) 1193213 964996 1047893 1220379 1193390 1.1.1 Claims on Government 1370428 1377351 1309316 1353481 1421675 1.1.1.1 Central Government 1363828 1362541 1288822 1318026 1399564 1.1.1.2 State Governments 6600 14809 20495 35454 22112 1.1.2 Government deposits with RBI 177215 412355 261423 133102 228285 1.1.2.1 Central Government 177172 412313 261381 133059 228243 1.1.2.2 State Governments 42 42 42 42 42 1.2 Other Banks’ Credit to Government 6318803 6258798 6889633 6936484 6906278 1.2 Other Banks Credit to Government (Including Merger) (6410358) (6350471) (6940509) (6987365) (6957160) 2 Bank Credit to Commercial Sector 16672145 16434572 18230417 18330843 18368384 2 Bank Credit to Commercial Sector (Including Merger) (17202832) (16970977) (18672006) (18766485) (18801586) 2.1 RBI’s credit to commercial sector 14406 11121 22760 20792 28593 2.2 Other banks’ credit to commercial sector 16657739 16423451 18207657 18310051 18339790 2.2 Other banks credit to commercial sector (Including Merger) (17188426) (16959856) (18649246) (18745693) (18772993) 2.2.1 Bank credit by commercial banks 15901477 15677730 17426890 17527786 17556777 2.2.1 Bank credit by commercial banks (Including Merger) (16432164) (16214135) (17868479) (17963429) (17989979) 2.2.2 Bank credit by co-operative banks 738194 728279 761677 763241 764165 2.2.3 Investments by commercial and co-operative banks in other securities 18068 17443 19091 19024 18849 2.2.3 Investments by commercial and co-operative banks in other securities (Including Merger) (18068) (17443) (19091) (19024) (18849) 3 Net Foreign Exchange Assets of Banking Sector (3.1 + 3.2) 5567504 5284622 5634421 5786688 5759028 3.1 RBIs net foreign exchange assets (3.1.1 - 3.1.2) 5241083 4985065 5272023 5424290 5396630 3.1.1 Gross foreign assets 5241083 4985066 5272019 5424286 5396628 3.1.2 Foreign liabilities 0 0 -4 -4 -2 3.2 Other banks’ net foreign exchange assets 326421 299557 362398 362398 362398 4 Government’s Currency Liabilities to the Public 33432 33198 35683 36017 36017 5 Banking Sector’s Net Non-monetary Liabilities 4953478 4482073 5209288 5438225 5411018 5 Banking Sectors Net Non-monetary Liabilities (Including Merger) (5467477) (4997364) (5637513) (5861747) (5833239) 5.1 Net non-monetary liabilities of RBI 1790134 1699563 1986997 2108359 2108450 5.2 Net non-monetary liabilities of other banks (residual) 3163344 2782510 3222291 3329867 3302567 5.2 Net non-monetary liabilities of other banks (residual) (Including Merger) (3677343) (3297801) (3650516) (3753388) (3724789) M₃(1+2+3+4–5) 24831618 24494113 26628759 26872185 26852080 M3 (1+2+3+4-5) (Including Merger) (24939860) (24606900) (26692999) (26935188) (26913942) Figures in parentheses include the impact of merger of a non-bank with bank. RBI Bulletin April 2025 253CURRENT STATISTICS No. 8: Monetary Survey (₹ Crore) Item Outstanding as on March 31/last reporting Fridays of the month/reporting Fridays 2023-24 2024 2025 Feb. 23 Jan. 24 Feb. 07 Feb. 21 1 2 3 4 5 Monetary Aggregates NM₁ (1.1+1.2.1+1.3) 6091700 5955970 6259608 6283276 6336721 NM₂ (NM₁ + 1.2.2.1) 14424855 14201318 15296176 15412810 15437569 NM2 (NM1 + 1.2.2.1) (Including Merger) (14473564) (14252072) (15325083) (15441161) (15465407) NM₃ (NM₂ +1.2.2.2 + 1.4 = 2.1 + 2.2 + 2.3 – 2.4 – 2.5) 25387764 25057984 27294849 27511689 27461802 NM3 (NM2 + 1.2.2.2 + 1.4 = 2.1 + 2.2 + 2.3 - 2.4 - 2.5) (Including Merger) (25496006) (25170771) (27359088) (27574692) (27523665) 1 Components 1.1 Currency with the Public 3410276 3361633 3503602 3537301 3558434 1.2 Aggregate Deposits of Residents 21105009 20833514 22732973 22921903 22889082 1.2 Aggregate Deposits of Residents (Including Merger) (21213252) (20946301) (22797212) (22984906) (22950944) 1.2.1 Demand Deposits 2586888 2510518 2651712 2634048 2664975 1.2.2 Time Deposits of Residents 18518121 18322995 20081261 20287855 20224106 1.2.2 Time Deposits of Residents (Including Merger) (18626364) (18435782) (20145500) (20350858) (20285969) 1.2.2.1 Short-term Time Deposits 8333155 8245348 9036567 9129535 9100848 1.2.2.1 Short-term Time Deposits (Including Merger) (8381864) (8296102) (9065475) (9157886) (9128686) 1.2.2.1.1 Certificates of Deposits (CDs) 369399 368278 503843 525557 513746 1.2.2.2 Long-term Time Deposits 10184967 10077647 11044693 11158320 11123259 1.2.2.2 Long-term Time Deposits (Including Merger) (10244500) (10139680) (11080025) (11192972) (11157283) 1.3 'Other' Deposits with RBI 94536 83819 104294 111927 113312 1.4 Call/Term Funding from Financial Institutions 777942 779019 953980 940558 900975 2 Sources 2.1 Domestic Credit 25295986 24781264 27384392 27710331 27688336 2.1 Domestic Credit (Including Merger) (25918227) (25409342) (27876856) (28196855) (28172420) 2.1.1 Net Bank Credit to the Government 7512016 7223794 7937526 8156863 8099668 2.1.1 Net Bank Credit to the Government (Including Merger) (7603571) (7315467) (7988402) (8207744) (8150550) 2.1.1.1 Net RBI credit to the Government 1193213 964996 1047893 1220379 1193390 2.1.1.2 Credit to the Government by the Banking System 6318803 6258798 6889633 6936484 6906278 2.1.1.2 Credit to the Government by the Banking System (Including Merger) (6410358) (6350471) (6940509) (6987365) (6957160) 2.1.2 Bank Credit to the Commercial Sector 17783970 17557470 19446866 19553468 19588668 2.1.2 Bank Credit to the Commercial Sector (Including Merger) (18314656) (18093875) (19888454) (19989111) (20021871) 2.1.2.1 RBI Credit to the Commercial Sector 14406 11121 22760 20792 28593 2.1.2.2 Credit to the Commercial Sector by the Banking System 17769564 17546349 19424106 19532676 19560075 2.1.2.2 Credit to the Commercial Sector by the Banking System (Including Merger) (18300250) (18082754) (19865694) (19968319) (19993278) 2.1.2.2.1 Other Investments ( Non-SLR Securities) 1089184 1101595 1201967 1198287 1206485 2.2 Government's Currency Liabilities to the Public 33432 33198 35683 36017 36017 2.3 Net Foreign Exchange Assets of the Banking Sector 5111079 4907388 5321759 5475205 5428386 2.3.1 Net Foreign Exchange Assets of the RBI 5241083 4985065 5272023 5424290 5396630 2.3.2 Net Foreign Currency Assets of the Banking System -130004 -77678 49737 50915 31756 2.4 Capital Account 3912897 3961198 4467201 4559639 4551061 2.5 Other items (net) 1653834 1217958 1408009 1573746 1562098 Figures in parentheses include the impact of merger of a non-bank with a bank. 254 RBI Bulletin April 2025CURRENT STATISTICS No. 9: Liquidity Aggregates (₹ Crore) Aggregates 2023-24 2024 2025 Feb. Dec. Jan. Feb. 1 2 3 4 5 1 NM₃ 25387764 25057984 27183290 27294849 27461802 (25496006) (25170771) (27249981) (27359088) (27523665) 2 Postal Deposits 729246 717215 732774 732774 732774 3 L₁ ( 1 + 2) 26117010 25775199 27916064 28027623 28194576 (26225252) (25887986) (27982755) (28091862) (28256439) 4 Liabilities of Financial Institutions 85150 62974 73559 75298 80416 4.1 Term Money Borrowings 2375 678 16 16 16 4.2 Certificates of Deposit 70245 50143 59920 61430 66365 4.3 Term Deposits 12531 12152 13622 13852 14035 5 L₂ (3 + 4) 26202160 25838173 27989623 28102921 28274993 (26310403) (25950960) (28056313) (28167160) (28336855) 6 Public Deposits with Non-Banking Financial Companies 102994 .. 116921 .. .. 7 L₃ (5 + 6) 26305155 .. 28106544 .. .. Note : 1. Figures in the columns might not add up to the total due to rounding off of numbers. 2. Figures in parentheses include the impact of merger of a non-bank with a bank. RBI Bulletin April 2025 255CURRENT STATISTICS No. 10: Reserve Bank of India Survey (₹ Crore) Item Outstanding as on March 31/last reporting Fridays of the month/reporting Fridays 2023-24 2024 2025 Feb. 23 Jan. 24 Feb. 7 Feb. 21 1 2 3 4 5 1 Components 1.1 Currency in Circulation 3511461 3456463 3599978 3632655 3651428 1.2 Bankers’ Deposits with the RBI 1025449 971038 948414 937590 947488 1.2.1 Scheduled Commercial Banks 956011 909400 889895 878388 888462 1.3 ‘Other’ Deposits with the RBI 94536 83819 104294 111927 113312 Reserve Money (1.1 + 1.2 + 1.3 = 2.1 + 2.2 + 2.3 – 2.4 – 2.5) 4631446 4511319 4652687 4682172 4712229 2 Sources 2.1 RBI’s Domestic Credit 1147066 1192619 1331978 1330223 1388031 2.1.1 Net RBI credit to the Government 1193213 964996 1047893 1220379 1193390 2.1.1.1 Net RBI credit to the Central Government (2.1.1.1.1 + 2.1.1.1.2 + 2.1.1.1.3 + 2.1.1.1.4 – 2.1.1.1.5) 1186655 950229 1027441 1184967 1171321 2.1.1.1.1 Loans and Advances to the Central Government - - - - - 2.1.1.1.2 Investments in Treasury Bills - - - - - 2.1.1.1.3 Investments in dated Government Securities 1363369 1362249 1288414 1317755 1399251 2.1.1.1.3.1 Central Government Securities 1363369 1362249 1288414 1317755 1399251 2.1.1.1.4 Rupee Coins 459 293 408 271 313 2.1.1.1.5 Deposits of the Central Government 177172 412313 261381 133059 228243 2.1.1.2 Net RBI credit to State Governments 6557 14767 20452 35412 22069 2.1.2 RBI’s Claims on Banks -60553 216502 261325 89052 166048 2.1.2.1 Loans and Advances to Scheduled Commercial Banks -60553 216502 261325 89052 166048 2.1.3 RBI’s Credit to Commercial Sector 14406 11121 22760 20792 28593 2.1.3.1 Loans and Advances to Primary Dealers 9358 9066 9556 8328 9096 2.1.3.2 Loans and Advances to NABARD - - - - - 2.2 Government’s Currency Liabilities to the Public 33432 33198 35683 36017 36017 2.3 Net Foreign Exchange Assets of the RBI 5241083 4985065 5272023 5424290 5396630 2.3.1 Gold 439319 396913 600379 631357 646668 2.3.2 Foreign Currency Assets 4801764 4588153 4671640 4792929 4749960 2.4 Capital Account 1589134 1646592 1870465 1959117 1950057 2.5 Other Items (net) 201000 52971 116532 149241 158394 No. 11: Reserve Money - Components and Sources (₹ Crore) Item Outstanding as on March 31/last Fridays of the month/Fridays 2023-24 2024 2025 Feb. 23 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 1 2 3 4 5 6 7 Reserve Money (1.1 + 1.2 + 1.3 = 2.1 + 2.2 + 2.3 + 2.4 + 2.5 – 2.6) 4631446 4511319 4689418 4682172 4763405 4712229 4750684 1 Components 1.1 Currency in Circulation 3511461 3456463 3600982 3632655 3642063 3651428 3651880 1.2 Bankers' Deposits with RBI 1025449 971038 982697 937590 1011925 947488 986086 1.3 ‘Other’ Deposits with RBI 94536 83819 105739 111927 109417 113312 112718 2 Sources 2.1 Net Reserve Bank Credit to Government 1193213 964996 1189067 1220379 1242028 1193390 1274102 2.2 Reserve Bank Credit to Banks -60553 216502 154192 89052 190264 166048 132244 2.3 Reserve Bank Credit to Commercial Sector 14406 11121 22953 20792 25935 28593 30888 2.4 Net Foreign Exchange Assets of RBI 5241083 4985065 5305327 5424290 5363066 5396630 5432063 2.5 Government's Currency Liabilities to the Public 33432 33198 36017 36017 36017 36017 36306 2.6 Net Non- Monetary Liabilities of RBI 1790134 1699563 2018138 2108359 2093905 2108450 2154920 256 RBI Bulletin April 2025CURRENT STATISTICS No. 12: Commercial Bank Survey (₹ Crore) Item Outstanding as on last reporting Fridays of the month/ reporting Fridays of the month 2023-24 2024 2025 Feb. 23 Jan. 24 Feb. 7 Feb. 21 1 2 3 4 5 1 Components 1.1 Aggregate Deposits of Residents 20145188 19876895 21774443 21961350 21931190 (20253430) (19989682) (21838682) (22024353) (21993052) 1.1.1 Demand Deposits 2443853 2368307 2510913 2492532 2524095 1.1.2 Time Deposits of Residents 17701334 17508587 19263530 19468818 19407095 (17809577) (17621374) (19327769) (19531821) (19468957) 1.1.2.1 Short-term Time Deposits 7965600 7878864 8668588 8760968 8733193 1.1.2.1.1 Certificates of Deposits (CDs) 369399 368278 503843 525557 513746 1.1.2.2 Long-term Time Deposits 9735734 9629723 10594941 10707850 10673902 1.2 Call/Term Funding from Financial Institutions 777942 779019 953980 940558 900975 2 Sources 2.1 Domestic Credit 23019606 22748921 25219289 25373200 25368511 (23641847) (23376999) (25711754) (25859724) (25852596) 2.1.1 Credit to the Government 6014054 5956167 6584147 6630994 6599626 (6105610) (6047841) (6635022) (6681876) (6650507) 2.1.2 Credit to the Commercial Sector 17005551 16792754 18635143 18742205 18768886 (17536238) (17329159) (19076731) (19177848) (19202088) 2.1.2.1 Bank Credit 15901477 15677730 17426890 17527786 17556777 (16432164) (16214135) (17868479) (17963429) (17989979) 2.1.2.1.1 Non-food Credit 15878397 15637228 17370711 17473841 17509329 (16409083) (16173633) (17812300) (17909484) (17942532) 2.1.2.2 Net Credit to Primary Dealers 22904 21566 14744 24601 14063 2.1.2.3 Investments in Other Approved Securities 949 825 504 494 524 2.1.2.4 Other Investments (in non-SLR Securities) 1080222 1092632 1193005 1189325 1197522 2.2 Net Foreign Currency Assets of Commercial Banks (2.2.1-2.2.2-2.2.3) -130004 -77678 49737 50915 31756 2.2.1 Foreign Currency Assets 241661 269656 520849 529865 501065 2.2.2 Non-resident Foreign Currency Repatriable Fixed Deposits 221796 215148 287890 301055 291252 2.2.3 Overseas Foreign Currency Borrowings 149868 132186 183222 177895 178057 2.3 Net Bank Reserves (2.3.1+2.3.2-2.3.3) 893350 775943 713399 873183 803573 2.3.1 Balances with the RBI 931483 909400 889895 878388 888462 2.3.2 Cash in Hand 89433 83045 84829 83847 81159 2.3.3 Loans and Advances from the RBI 127566 216502 261325 89052 166048 2.4 Capital Account 2299592 2290436 2572565 2576351 2576834 2.5 Other items (net) (2.1+2.2+2.3-2.4-1.1-1.2) 560230 500838 681437 819038 794842 2.5.1 Other Demand and Time Liabilities (net of 2.2.3) 787560 789201 807699 863841 843551 2.5.2 Net Inter-Bank Liabilities (other than to PDs) 197781 180617 153034 124618 116845 Figures in parentheses include the impact of merger of a non-bank with a bank. No. 13: Scheduled Commercial Banks’ Investments (₹ Crore) Item As on 2024 2025 March 22, 2024 Feb. 23 Jan. 24 Feb. 07 Feb. 21 1 2 3 4 5 1 SLR Securities 6106558 6048666 6635526 6682369 6651031 (6015003) (5956993) (6584651) (6631488) (6600149) 2 Other Government Securities (Non-SLR) 177136 177882 164435 162963 163938 3 Commercial Paper 61175 53516 58059 60605 56570 4 Shares issued by 4.1 PSUs 8475 8636 13079 13174 12782 4.2 Private Corporate Sector 77722 79935 96841 96613 96188 4.3 Others 5624 5620 7505 7520 7518 5 Bonds/Debentures issued by 5.1 PSUs 103070 96898 125694 122613 125644 5.2 Private Corporate Sector 287596 288205 234947 233488 237406 5.3 Others 124690 114923 154889 156727 156229 6 Instruments issued by 6.1 Mutual funds 62499 89916 141035 146709 145589 6.2 Financial institutions 172340 176856 194810 188912 195657 Note: Data against column Nos. (1), (2) & (3) are Final and for column Nos. (4) & (5) data are Provisional. Data since July 14, 2023 include the impact of the merger of a non-bank with a bank. Figures in parentheses exclude the impact of the merger. RBI Bulletin April 2025 257CURRENT STATISTICS No. 14: Business in India - All Scheduled Banks and All Scheduled Commercial Banks (₹ Crore) Item As on the Last Reporting Friday (in case of March)/ Last Friday All Scheduled Banks All Scheduled Commercial Banks 2024 2025 2024 2025 2023-24 2023-24 Feb. Jan. Feb. Feb. Jan. Feb. 1 2 3 4 5 6 7 8 Number of Reporting Banks 210 210 208 208 137 137 135 135 1 Liabilities to the Banking System 554117 520348 454438 443848 549351 516165 448851 438922 1.1 Demand and Time Deposits from Banks 298452 269766 283393 287294 294471 266228 278365 282773 1.2 Borrowings from Banks 182566 178124 140182 118234 182429 178119 139965 118149 1.3 Other Demand and Time Liabilities 73100 72458 30863 38320 72452 71818 30521 38000 2 Liabilities to Others 22664868 22367660 24925459 25091193 22190597 21905235 24441212 24603927 2.1 Aggregate Deposits 20932067 20650054 22955228 23098180 20475226 20204830 22489507 22630598 (20823825) (20537267) (22891563) (23037055) (20366984) (20092042) (22425841) (22569473) 2.1.1 Demand 2492916 2416163 2720203 2753855 2443853 2368307 2672172 2705279 2.1.2 Time 18439151 18233891 20235026 20344326 18031373 17836522 19817335 19925320 2.2 Borrowings 782260 783905 898159 889316 777942 779019 893564 884179 2.3 Other Demand and Time Liabilities 950541 933701 1072072 1103696 937428 921387 1058140 1089150 3 Borrowings from Reserve Bank 222716 256409 256989 229480 222716 256374 256989 229480 3.1 Against Usance Bills /Promissory Notes - - - - - - - - 3.2 Others 222716 256409 256989 229480 222716 256374 256989 229480 4 Cash in Hand and Balances with Reserve Bank 1043272 1014767 1040685 1031337 1020916 992445 1019995 1010913 4.1 Cash in Hand 91886 85534 98194 86176 89433 83045 95912 83724 4.2 Balances with Reserve Bank 951386 929232 942491 945160 931483 909400 924083 927189 5 Assets with the Banking System 455057 428737 394269 414392 374474 357114 321056 335331 5.1 Balances with Other Banks 246384 238384 251177 260695 198327 191943 198663 206428 5.1.1 In Current Account 12010 11228 12679 12981 8971 8458 10105 10370 5.1.2 In Other Accounts 234373 227156 238498 247714 189357 183484 188558 196058 5.2 Money at Call and Short Notice 39614 33371 34389 42526 12355 13834 20195 25496 5.3 Advances to Banks 51325 49373 42801 44597 48368 46054 39363 39833 5.4 Other Assets 117734 107609 65903 66574 115424 105284 62835 63574 6 Investment 6256962 6196793 6785965 6830178 6106558 6048666 6633890 6676664 (6165407) (6105120) (6735083) (6779497) (6015003) (5956993) (6583008) (6625984) 6.1 Government Securities 6249319 6190053 6777698 6821889 6105610 6047841 6633347 6676060 6.2 Other Approved Securities 7643 6740 8267 8289 949 825 544 604 7 Bank Credit 16866336 16646357 18512453 18667299 16432164 16214135 18053607 18202174 (16335650) (16109952) (18074198) (18238110) (15901477) (15677730) (17615353) (17772985) 7a Food Credit 72282 89704 105577 96468 23081 40502 54961 45854 7.1 Loans, Cash-credits and Overdrafts 16565348 16365960 18180682 18334125 16134303 15936696 17725261 17872448 7.2 Inland Bills-Purchased 60471 52922 76574 75858 60467 52912 74880 74221 7.3 Inland Bills-Discounted 199761 188407 216630 218916 197358 186108 215511 217743 7.4 Foreign Bills-Purchased 16662 16657 16870 15279 16412 16405 16645 15032 7.5 Foreign Bills-Discounted 24094 22411 21696 23120 23624 22014 21310 22730 Note: Data in column Nos. (4) & (8) are Provisional Data since July 2023 include the impact of the merger of a non-bank with a bank. Figures in parentheses exclude the impact of the merger. 258 RBI Bulletin April 2025CURRENT STATISTICS No. 15: Deployment of Gross Bank Credit by Major Sectors (₹ Crore) Outstanding as on Growth(%) Mar. 22, Financial Sector 2024 2024 2025 year so far Y-o-Y Feb. 23 Jan. 24 Feb. 21 2024-25 2025 1 2 3 4 % % I. Bank Credit (II + III) 16432164 16214135 17874756 17989988 9.5 11.0 (15901477) (15677730) (17433167) (17556785) (10.4) (12.0) II. Food Credit 23081 40502 56179 47448 105.6 17.2 III. Non-food Credit 16409083 16173633 17818577 17942540 9.3 10.9 (15878397) (15637228) (17376988) (17509338) (10.3) (12.0) 1. Agriculture & Allied Activities 2071251 2032170 2253510 2264312 9.3 11.4 2. Industry (Micro and Small, Medium and Large) 3652804 3616918 3874601 3875386 6.1 7.1 (3635810) (3599906) (3862535) (3863437) (6.3) (7.3) 2.1 Micro and Small 726315 715104 778391 784802 8.1 9.7 2.2 Medium 303998 298923 345986 352907 16.1 18.1 2.3 Large 2622490 2602890 2750224 2737676 4.4 5.2 3. Services 4592227 4515479 5013597 5056929 10.1 12.0 (4490467) (4412072) (4941743) (4987504) (11.1) (13.0) 3.1 Transport Operators 230175 227697 253917 257630 11.9 13.1 3.2 Computer Software 25917 27023 33729 33062 27.6 22.3 3.3 Tourism, Hotels & Restaurants 77513 76132 81478 82022 5.8 7.7 3.4 Shipping 7067 6856 7180 7411 4.9 8.1 3.5 Aviation 43248 43720 44788 45928 6.2 5.0 3.6 Professional Services 167234 161758 190859 192799 15.3 19.2 3.7 Trade 1025752 1009471 1131031 1157875 12.9 14.7 3.7.1. Wholesale Trade¹ 538744 531859 612701 632612 17.4 18.9 3.7.2 Retail Trade 487008 477612 518330 525263 7.9 10.0 3.8 Commercial Real Estate 469013 463452 523535 526161 12.2 13.5 (400470) (393894) (476106) (481011) (20.1) (22.1) 3.9 Non-Banking Financial Companies (NBFCs)² of which, 1548027 1514950 1618650 1612332 4.2 6.4 3.9.1 Housing Finance Companies (HFCs) 325626 337759 325646 324575 -0.3 -3.9 3.9.2 Public Financial Institutions (PFIs) 226963 213661 219865 217593 -4.1 1.8 3.10 Other Services³ 998281 984420 1128430 1141708 14.4 16.0 (978198) (963850) (1112253) (1125683) (15.1) (16.8) 4. Personal Loans 5331290 5263896 5831547 5878918 10.3 11.7 (4919468) (4847945) (5473924) (5527053) (12.4) (14.0) 4.1 Consumer Durables 23713 23969 23508 24506 3.3 2.2 4.2 Housing 2718715 2680411 2950974 2978759 9.6 11.1 (2331935) (2289957) (2614403) (2647643) (13.5) (15.6) 4.3 Advances against Fixed Deposits 125239 120192 135900 134519 7.4 11.9 4.4 Advances to Individuals against share & bonds 8492 8401 9765 9808 15.5 16.7 4.5 Credit Card Outstanding 257016 258107 292084 287047 11.7 11.2 4.6 Education 119380 118708 135864 136821 14.6 15.3 4.7 Vehicle Loans 573398 565741 615236 619783 8.1 9.6 4.8 Loan against gold jewellery⁴ 102562 102008 178861 191198 86.4 87.4 4.9 Other Personal Loans 1402775 1386360 1489354 1496477 6.7 7.9 (1377966) (1361145) (1468357) (1475779) (7.1) (8.4) 5. Priority Sector (Memo) - (i) Agriculture & Allied Activities⁵ 2081856 2049198 2248829 2256770 8.4 10.1 (ii) Micro & Small Enterprises⁶ 1974191 1958526 2191766 2223843 12.6 13.5 (iii) Medium Enterprises⁷ 490703 480987 574228 584585 19.1 21.5 (iv) Housing 755222 754645 747261 747435 -1.0 -1.0 (660572) (658400) (664181) (664855) (0.6) (1.0) (v) Education Loans 62235 62106 63056 62831 1.0 1.2 (vi) Renewable Energy 5991 5868 7559 8491 41.7 44.7 (vii) Social Infrastructure 2613 2592 983 1233 -52.8 -52.4 (viii) Export Credit 11256 11075 12739 11827 5.1 6.8 (ix) Others 61336 62553 53143 50007 -18.5 -20.1 (x) Weaker Sections including net PSLC- SF/MF 1647778 1624823 1793997 1789945 8.6 10.2 RBI Bulletin April 2025 259CURRENT STATISTICS No. 16: Industry-wise Deployment of Gross Bank Credit (₹ Crore) Outstanding as on Growth(%) Financial 2024 2025 Y-o-Y Mar. 22, year so far Industry 2024 Feb. 23 Jan. 24 Feb. 21 2025-26 2025 1 2 3 4 % % 2 Industries (2.1 to 2.19) 3652804 3616918 3874601 3875386 6.1 7.1 (3635810) (3599906) (3862535) (3863437) (6.3) (7.3) 2.1 Mining & Quarrying (incl. Coal) 54166 54487 53191 53021 -2.1 -2.7 2.2 Food Processing 208864 200451 217363 219092 4.9 9.3 2.2.1 Sugar 26383 23837 23147 26872 1.9 12.7 2.2.2 Edible Oils & Vanaspati 19700 18759 21313 21082 7.0 12.4 2.2.3 Tea 5692 5661 6116 6069 6.6 7.2 2.2.4 Others 157089 152194 166786 165068 5.1 8.5 2.3 Beverage & Tobacco 31136 29929 30468 31296 0.5 4.6 2.4 Textiles 256048 255689 267676 273728 6.9 7.1 2.4.1 Cotton Textiles 99199 98931 101271 106116 7.0 7.3 2.4.2 Jute Textiles 4280 4275 4328 4329 1.2 1.3 2.4.3 Man-Made Textiles 45111 45974 49071 48906 8.4 6.4 2.4.4 Other Textiles 107458 106509 113005 114377 6.4 7.4 2.5 Leather & Leather Products 12588 12327 12711 12982 3.1 5.3 2.6 Wood & Wood Products 23839 23669 26895 27292 14.5 15.3 2.7 Paper & Paper Products 46426 46405 51885 51942 11.9 11.9 2.8 Petroleum, Coal Products & Nuclear Fuels 132356 135817 154402 154419 16.7 13.7 2.9 Chemicals & Chemical Products 249347 246408 265385 263166 5.5 6.8 2.9.1 Fertiliser 37569 36366 31244 30527 -18.7 -16.1 2.9.2 Drugs & Pharmaceuticals 81036 80768 88010 88941 9.8 10.1 2.9.3 Petro Chemicals 23157 23008 27832 25742 11.2 11.9 2.9.4 Others 107584 106266 118299 117956 9.6 11.0 2.10 Rubber, Plastic & their Products 90420 90019 100175 101706 12.5 13.0 2.11 Glass & Glassware 12090 11666 12611 13198 9.2 13.1 2.12 Cement & Cement Products 59757 60574 60576 60313 0.9 -0.4 2.13 Basic Metal & Metal Product 384447 381371 434354 431320 12.2 13.1 2.13.1 Iron & Steel 273803 270540 308145 301743 10.2 11.5 2.13.2 Other Metal & Metal Product 110645 110831 126210 129576 17.1 16.9 2.14 All Engineering 196643 195280 229142 232448 18.2 19.0 2.14.1 Electronics 43175 44134 51243 49647 15.0 12.5 2.14.2 Others 153468 151146 177899 182801 19.1 20.9 2.15 Vehicles, Vehicle Parts & Transport Equipment 113185 110497 117775 117109 3.5 6.0 2.16 Gems & Jewellery 84860 81651 86364 83040 -2.1 1.7 2.17 Construction 133520 133235 145199 149730 12.1 12.4 2.18 Infrastructure 1304096 1292329 1309202 1302686 -0.1 0.8 2.18.1 Power 644042 645097 664682 660874 2.6 2.4 2.18.2 Telecommunications 138192 127825 124061 116448 -15.7 -8.9 2.18.3 Roads 318072 317768 314494 315924 -0.7 -0.6 2.18.4 Airports 7280 7384 8682 8799 20.9 19.2 2.18.5 Ports 6681 7838 5465 5879 -12.0 -25.0 2.18.6 Railways 13062 12144 13306 13293 1.8 9.5 2.18.7 Other Infrastructure 176767 174274 178513 181469 2.7 4.1 2.19 Other Industries 259016 255113 299228 296900 14.6 16.4 Note: (1) Data since July 28, 2023 include the impact of the merger of a non-bank with a bank. Figures in parentheses exclude the impact of the merger. 260 RBI Bulletin April 2025CURRENT STATISTICS No. 17: State Co-operative Banks Maintaining Accounts with the Reserve Bank of India (₹ Crore) Last Reporting Friday (in case of March)/Last Friday/ Item Reporting Friday 2024 2025 2023-24 Jan. 26 Nov. 15 Nov. 29 Dec. 13 Dec. 27 Jan. 10 Jan. 24 Jan. 31 1 2 3 4 5 6 7 8 9 Number of Reporting Banks 33 33 34 34 34 34 34 34 34 1 Aggregate Deposits (2.1.1.2+2.2.1.2) 138788.9 135053.7 138073.1 138154.1 131867.2 140702.2 141951.5 140580.6 137422.7 2 Demand and Time Liabilities 2.1 Demand Liabilities 30226.7 28067.3 26021.8 26562.1 26329.5 25817.1 25505.2 24519.2 25128.9 2.1.1 Deposits 2.1.1.1 Inter-Bank 9101.3 7628.0 7239.1 6670.1 6850.3 6676.5 6951.0 6903.9 6389.8 2.1.1.2 Others 15000.4 14877.1 13293.6 13187.7 12967.4 13201.0 12879.1 12582.5 12576.7 2.1.2 Borrowings from Banks 130.0 99.9 449.8 1454.3 1576.4 997.9 791.7 12.0 789.3 2.1.3 Other Demand Liabilities 5995.0 5462.2 5039.2 5249.9 4935.4 4941.7 4883.3 5020.9 5373.1 2.2 Time Liabilities 198141.8 181797.1 178177.3 176625.0 168281.8 179599.5 182473.8 182418.4 178875.8 2.2.1 Deposits 2.2.1.1 Inter-Bank 72308.4 58233.2 51788.5 50047.3 47748.7 50440.5 51697.4 52718.8 52326.4 2.2.1.2 Others 123788.5 120176.6 124779.5 124966.4 118899.8 127501.2 129072.3 127998.0 124846.0 2.2.2 Borrowings from Banks 673.6 2181.3 651.9 651.9 651.9 651.9 650.8 650.8 650.8 2.2.3 Other Time Liabilities 1371.3 1206.0 957.3 959.5 981.4 1005.9 1053.3 1050.8 1052.6 3 Borrowing from Reserve Bank 0.0 100.0 4 Borrowings from a notified bank / Government 95914.5 90881.7 173712.9 112111.7 114646.7 112137.9 112172.3 114464.9 111993.8 4.1 Demand 27317.7 23859.7 102827.6 45109.3 44426.4 44100.3 43778.8 44280.0 44397.3 4.2 Time 68596.8 67022.0 70885.3 67002.4 70220.3 68037.6 68393.5 70184.9 67596.4 5 Cash in Hand and Balances with Reserve Bank 16263.7 11043.1 12004.2 11145.5 12024.9 11868.9 10869.4 10837.2 11244.6 5.1 Cash in Hand 960.0 742.4 772.6 821.1 773.9 845.0 763.4 699.7 777.4 5.2 Balance with Reserve Bank 15303.7 10300.8 11231.6 10324.4 11251.0 11023.9 10106.0 10137.5 10467.2 6 Balances with Other Banks in Current Account 2088.1 1446.5 1035.0 1118.1 1287.5 1010.4 1217.9 1262.1 1204.8 7 Investments in Government Securities 77700.5 73701.6 75275.2 75074.9 74143.9 74779.2 75371.7 75514.9 75052.7 8 Money at Call and Short Notice 34355.3 27662.3 15588.7 12457.8 13852.0 12854.5 17090.8 15819.4 12239.3 9 Bank Credit (10.1+11) 135141.9 132726.7 167629.4 166666.0 141596.3 168136.4 169458.4 170580.3 170245.1 10 Advances 10.1 Loans, Cash-Credits and Overdrafts 134936.8 132569.3 167432.0 166480.4 141403.7 167935.8 169247.9 170385.3 170045.3 10.2 Due from Banks 142185.2 136927.3 113950.8 111546.4 110681.2 110877.6 110955.4 112689.7 112047.0 11 Bills Purchased and Discounted 205.1 157.5 197.4 185.6 192.6 200.6 210.4 195.0 199.8 RBI Bulletin April 2025 261CURRENT STATISTICS Prices and Production No. 18: Consumer Price Index (Base: 2012=100) Group/Sub group 2023-24 Rural Urban Combined Rural Urban Combined Mar.24 Feb.25 Mar.25 (P) Mar.24 Feb.25 Mar.25 (P) Mar.24 Feb.25 Mar.25 (P) 1 2 3 4 5 6 7 8 9 10 11 12 1 Food and beverages 185.9 192.7 188.4 188.5 195.4 194.0 194.4 201.3 200.1 190.7 197.6 196.2 1.1 Cereals and products 181.4 181.7 181.5 189.3 200.6 200.8 188.5 198.6 198.9 189.0 200.0 200.2 1.2 Meat and fish 213.0 221.3 215.9 217.9 219.1 218.1 226.7 229.0 228.3 221.0 222.6 221.7 1.3 Egg 185.4 189.5 187.0 192.7 194.9 185.3 194.3 200.0 190.3 193.3 196.9 187.2 1.4 Milk and products 181.4 181.5 181.4 183.2 187.6 187.9 183.6 188.4 188.3 183.3 187.9 188.0 1.5 Oils and fats 165.3 158.7 162.9 160.2 188.9 189.7 154.7 176.0 177.4 158.2 184.2 185.2 1.6 Fruits 172.1 179.9 175.7 172.8 195.1 201.6 176.7 198.7 204.7 174.6 196.8 203.0 1.7 Vegetables 183.9 229.9 199.5 182.5 181.2 171.0 222.6 216.8 204.3 196.1 193.3 182.3 1.8 Pulses and products 192.2 196.5 193.7 199.7 200.2 194.3 205.0 205.1 199.3 201.5 201.9 196.0 1.9 Sugar and confectionery 126.2 128.1 126.9 128.0 131.4 133.1 130.1 133.8 135.0 128.7 132.2 133.7 1.10 Spices 238.0 228.4 234.8 236.3 224.8 222.9 228.2 222.1 220.5 233.6 223.9 222.1 1.11 Non-alcoholic beverages 180.7 168.2 175.5 182.1 188.3 188.9 170.3 177.3 178.0 177.2 183.7 184.3 1.12 Prepared meals, snacks, sweets 193.3 200.9 196.8 195.9 202.4 202.9 204.6 214.0 214.9 199.9 207.8 208.5 2 Pan, tobacco and intoxicants 202.0 207.1 203.3 204.0 209.0 209.7 210.2 213.4 213.8 205.7 210.2 210.8 3 Clothing and footwear 192.9 181.5 188.4 195.1 199.8 200.0 183.8 188.6 189.0 190.6 195.4 195.6 3.1 Clothing 193.5 183.5 189.6 195.8 200.7 201.0 185.8 190.8 191.2 191.9 196.8 197.1 3.2 Footwear 189.4 170.2 181.4 191.1 194.1 194.3 172.3 176.2 176.7 183.3 186.7 187.0 4 Housing -- 176.7 176.7 -- -- -- 178.2 183.7 183.6 178.2 183.7 183.6 5 Fuel and light 183.0 178.9 181.4 181.0 182.8 182.7 167.4 171.0 171.3 175.8 178.3 178.4 6 Miscellaneous 181.7 173.7 177.8 184.2 192.9 193.5 176.0 183.8 184.6 180.2 188.5 189.2 6.1 Household goods and services 181.5 171.8 176.9 183.3 187.7 187.3 174.0 179.1 179.6 178.9 183.6 183.7 6.2 Health 190.8 185.2 188.7 194.3 201.6 202.4 189.1 196.3 197.4 192.3 199.6 200.5 6.3 Transport and communication 171.1 161.4 166.0 172.0 177.7 178.1 161.9 166.6 166.9 166.7 171.9 172.2 6.4 Recreation and amusement 175.8 171.1 173.2 177.8 181.9 181.1 172.8 177.3 177.7 175.0 179.3 179.2 6.5 Education 184.0 179.1 181.1 186.1 192.6 193.1 181.2 188.2 188.6 183.2 190.0 190.5 6.6 Personal care and effects 186.3 187.4 186.8 191.3 214.2 216.8 192.8 216.3 219.2 191.9 215.1 217.8 General Index (All Groups) 185.6 182.4 184.1 187.8 194.5 193.9 183.6 190.1 189.9 185.8 192.5 192.0 Source: National Statistical Office, Ministry of Statistics and Programme Implementation, Government of India. P: Provisional No. 19: Other Consumer Price Indices Item Base Year Linking 2023-24 2024 2025 Factor Feb. Jan. Feb. 1 2 3 4 5 6 1 Consumer Price Index for Industrial Workers 2016 2.88 137.9 139.2 143.2 142.8 2 Consumer Price Index for Agricultural Labourers 1986-87 5.89 1229 1258 1316 1309 3 Consumer Price Index for Rural Labourers 1986-87 - 1240 1269 1328 1321 Source: Labour Bureau, Ministry of Labour and Employment, Government of India. No. 20: Monthly Average Price of Gold and Silver in Mumbai Item 2023-24 2024 2025 Feb. Jan. Feb. 1 2 3 4 1 Standard Gold (₹ per 10 grams) 60624 62017 79079 84995 2 Silver (₹ per kilogram) 72243 70328 90020 95524 Source: India Bullion & Jewellers Association Ltd., Mumbai for Gold and Silver prices in Mumbai. 262 RBI Bulletin April 2025CURRENT STATISTICS No. 21: Wholesale Price Index (Base: 2011-12 = 100) Commodities Weight 2023-24 2024 2025 Mar. Jan. Feb.(P) Mar.(P) 1 2 3 4 5 6 1 ALL COMMODITIES 100.000 151.4 151.4 155.0 154.8 154.5 1.1 PRIMARY ARTICLES 22.618 183.0 183.2 189.7 186.6 184.6 1.1.1 FOOD ARTICLES 15.256 191.3 191.4 199.8 195.8 194.4 1.1.1.1 Food Grains (Cereals+Pulses) 3.462 193.8 202.3 213.2 212.1 210.1 1.1.1.2 Fruits & Vegetables 3.475 210.2 197.2 210.7 198.1 196.4 1.1.1.3 Milk 4.440 180.3 184.2 187.0 186.4 186.8 1.1.1.4 Eggs, Meat & Fish 2.402 172.1 168.9 174.7 171.5 170.1 1.1.1.5 Condiments & Spices 0.529 235.4 233.5 231.6 213.1 201.1 1.1.1.6 Other Food Articles 0.948 189.5 198.8 217.1 223.0 223.1 1.1.2 NON-FOOD ARTICLES 4.119 162.4 160.0 167.5 166.8 162.8 1.1.2.1 Fibres 0.839 168.0 165.0 161.5 161.8 162.4 1.1.2.2 Oil Seeds 1.115 185.0 178.7 183.4 178.9 179.3 1.1.2.3 Other non-food Articles 1.960 134.9 133.7 142.7 143.1 142.0 1.1.2.4 Floriculture 0.204 279.7 291.0 343.7 349.2 274.6 1.1.3 MINERALS 0.833 217.7 221.6 227.2 227.2 227.9 1.1.3.1 Metallic Minerals 0.648 204.2 212.6 216.3 216.3 214.6 1.1.3.2 Other Minerals 0.185 265.0 253.2 265.7 265.5 274.7 1.1.4 CRUDE PETROLEUM & NATURAL GAS 2.410 153.6 157.1 150.9 148.7 145.1 1.2 FUEL & POWER 13.152 152.0 152.1 152.0 153.8 152.4 1.2.1 COAL 2.138 136.4 135.8 135.6 135.6 135.6 1.2.1.1 Coking Coal 0.647 143.4 143.4 143.4 143.4 143.4 1.2.1.2 Non-Coking Coal 1.401 124.8 125.8 125.8 125.8 125.8 1.2.1.3 Lignite 0.090 267.6 236.0 231.0 231.0 231.2 1.2.2 MINERAL OILS 7.950 159.0 159.4 155.0 157.9 156.8 1.2.3 ELECTRICITY 3.064 145.0 144.6 155.8 156.1 152.5 1.3 MANUFACTURED PRODUCTS 64.231 140.2 140.1 143.4 143.8 144.4 1.3.1 MANUFACTURE OF FOOD PRODUCTS 9.122 160.5 162.1 177.5 177.8 179.4 1.3.1.1 Processing and Preserving of meat 0.134 145.3 151.3 157.3 158.1 160.0 1.3.1.2 Processing and Preserving of fish, Crustaceans, Molluscs and products thereof 0.204 142.9 149.6 145.4 146.0 146.6 1.3.1.3 Processing and Preserving of fruit and Vegetables 0.138 130.4 130.2 132.8 132.3 133.8 1.3.1.4 Vegetable and Animal oils and Fats 2.643 145.0 145.7 187.5 188.5 190.8 1.3.1.5 Dairy products 1.165 179.1 178.8 181.9 182.8 182.9 1.3.1.6 Grain mill products 2.010 175.6 182.7 190.4 189.8 188.8 1.3.1.7 Starches and Starch products 0.110 157.1 166.2 164.1 162.8 161.1 1.3.1.8 Bakery products 0.215 165.4 165.8 174.9 174.9 176.1 1.3.1.9 Sugar, Molasses & honey 1.163 134.6 136.7 138.6 141.4 143.4 1.3.1.10 Cocoa, Chocolate and Sugar confectionery 0.175 139.8 142.4 171.7 172.2 174.5 1.3.1.11 Macaroni, Noodles, Couscous and Similar farinaceous products 0.026 149.9 148.8 161.0 159.2 171.5 1.3.1.12 Tea & Coffee products 0.371 176.2 161.9 161.8 156.1 178.9 1.3.1.13 Processed condiments & salt 0.163 192.1 195.5 194.1 192.1 188.8 1.3.1.14 Processed ready to eat food 0.024 146.3 146.9 155.4 154.7 155.5 1.3.1.15 Health supplements 0.225 179.1 174.9 189.5 188.1 186.5 1.3.1.16 Prepared animal feeds 0.356 208.3 203.9 199.0 197.4 195.5 1.3.2 MANUFACTURE OF BEVERAGES 0.909 131.5 132.5 134.4 134.5 134.6 1.3.2.1 Wines & spirits 0.408 133.3 134.1 136.9 137.4 137.6 1.3.2.2 Malt liquors and Malt 0.225 135.6 136.6 138.9 138.9 139.1 1.3.2.3 Soft drinks; Production of mineral waters and Other bottled waters 0.275 125.5 126.7 126.8 126.5 126.4 1.3.3 MANUFACTURE OF TOBACCO PRODUCTS 0.514 173.5 176.3 181.2 180.0 180.2 1.3.3.1 Tobacco products 0.514 173.5 176.3 181.2 180.0 180.2 RBI Bulletin April 2025 263CURRENT STATISTICS No. 21: Wholesale Price Index (Contd.) (Base: 2011-12 = 100) Commodities Weight 2023-24 2024 2025 Mar. Jan. Feb.(P) Mar.(P) 1 2 3 4 5 6 1.3.4 MANUFACTURE OF TEXTILES 4.881 134.6 134.3 137.0 137.0 136.6 1.3.4.1 Preparation and Spinning of textile fibres 2.582 120.1 119.8 120.8 120.8 120.6 1.3.4.2 Weaving & Finishing of textiles 1.509 157.5 156.3 160.9 161.1 159.5 1.3.4.3 Knitted and Crocheted fabrics 0.193 120.0 120.6 124.1 124.8 124.4 1.3.4.4 Made-up textile articles, Except apparel 0.299 156.6 158.7 162.0 160.4 161.9 1.3.4.5 Cordage, Rope, Twine and Netting 0.098 139.2 137.6 146.1 147.8 147.6 1.3.4.6 Other textiles 0.201 129.6 131.6 136.6 136.5 137.2 1.3.5 MANUFACTURE OF WEARING APPAREL 0.814 150.8 151.5 154.2 154.3 154.5 1.3.5.1 Manufacture of Wearing Apparel (woven), Except fur Apparel 0.593 148.7 148.7 151.4 151.8 152.2 1.3.5.2 Knitted and Crocheted apparel 0.221 156.6 159.0 161.6 161.2 160.6 1.3.6 MANUFACTURE OF LEATHER AND RELATED PRODUCTS 0.535 124.1 123.7 127.5 125.8 126.2 1.3.6.1 Tanning and Dressing of leather; Dressing and Dyeing of fur 0.142 107.3 104.8 112.2 107.7 107.0 1.3.6.2 Luggage, HandbAgs, Saddlery and Harness 0.075 140.9 140.7 142.3 143.0 143.0 1.3.6.3 Footwear 0.318 127.7 128.1 130.9 129.9 130.8 1.3.7 MANUFACTURE OF WOOD AND PRODUCTS OF WOOD AND CORK 0.772 146.6 149.1 149.6 148.8 150.0 1.3.7.1 Saw milling and Planing of wood 0.124 137.8 139.4 141.7 141.6 141.3 1.3.7.2 Veneer sheets; Manufacture of plywood, Laminboard, Particle board and Other panels and Boards 0.493 146.1 149.0 149.0 147.5 149.7 1.3.7.3 Builder's carpentry and Joinery 0.036 206.4 214.1 214.5 215.1 215.1 1.3.7.4 Wooden containers 0.119 139.8 140.0 140.6 141.7 140.7 1.3.8 MANUFACTURE OF PAPER AND PAPER PRODUCTS 1.113 140.3 138.0 139.5 140.8 141.3 1.3.8.1 Pulp, Paper and Paperboard 0.493 147.6 144.5 144.5 145.2 145.8 1.3.8.2 Corrugated paper and Paperboard and Containers of paper and Paperboard 0.314 140.9 143.4 149.0 150.8 150.6 1.3.8.3 Other articles of paper and Paperboard 0.306 128.0 121.8 121.6 123.7 124.4 1.3.9 PRINTING AND REPRODUCTION OF RECORDED MEDIA 0.676 182.3 184.6 190.0 190.7 189.9 1.3.9.1 Printing 0.676 182.3 184.6 190.0 190.7 189.9 1.3.10 MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS 6.465 136.9 135.6 136.8 137.1 136.9 1.3.10.1 Basic chemicals 1.433 139.9 136.5 139.7 140.7 141.2 1.3.10.2 Fertilizers and Nitrogen compounds 1.485 142.8 142.6 142.9 143.6 142.4 1.3.10.3 Plastic and Synthetic rubber in primary form 1.001 132.3 132.4 133.8 134.1 133.9 1.3.10.4 Pesticides and Other agrochemical products 0.454 132.8 130.5 129.2 129.2 129.9 1.3.10.5 Paints, Varnishes and Similar coatings, Printing ink and Mastics 0.491 143.7 141.0 139.1 138.5 138.4 1.3.10.6 Soap and Detergents, Cleaning and Polishing preparations, Perfumes and Toilet preparations 0.612 139.7 138.0 140.6 140.8 141.2 1.3.10.7 Other chemical products 0.692 134.4 134.5 135.5 135.1 134.1 1.3.10.8 Man-made fibres 0.296 103.6 103.6 104.7 104.1 104.9 1.3.11 MANUFACTURE OF PHARMACEUTICALS, MEDICINAL CHEMICAL AND BOTANICAL PRODUCTS 1.993 142.9 143.4 145.0 145.0 145.2 1.3.11.1 Pharmaceuticals, Medicinal chemical and Botanical products 1.993 142.9 143.4 145.0 145.0 145.2 1.3.12 MANUFACTURE OF RUBBER AND PLASTICS PRODUCTS 2.299 127.5 128.2 129.3 129.7 129.7 1.3.12.1 Rubber Tyres and Tubes; Retreading and Rebuilding of Rubber Tyres 0.609 113.7 113.8 117.1 117.2 117.0 1.3.12.2 Other Rubber Products 0.272 107.3 108.6 112.6 113.0 112.6 1.3.12.3 Plastics products 1.418 137.3 138.2 137.8 138.3 138.4 1.3.13 MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS 3.202 134.7 133.1 132.2 132.6 132.7 1.3.13.1 Glass and Glass products 0.295 163.8 163.9 163.7 163.8 163.4 1.3.13.2 Refractory products 0.223 119.7 119.7 125.2 126.2 126.0 1.3.13.3 Clay Building Materials 0.121 123.9 119.9 134.5 132.4 133.5 1.3.13.4 Other Porcelain and Ceramic Products 0.222 122.3 124.4 125.1 125.1 124.7 1.3.13.5 Cement, Lime and Plaster 1.645 137.3 134.3 130.2 131.2 131.6 264 RBI Bulletin April 2025CURRENT STATISTICS No. 21: Wholesale Price Index (Contd.) (Base: 2011-12 = 100) Commodities Weight 2023-24 2024 2025 Mar. Jan. Feb.(P) Mar.(P) 1 2 3 4 5 6 1.3.13.6 Articles of Concrete, Cement and Plaster 0.292 137.7 137.2 140.4 140.4 138.8 1.3.13.7 Cutting, Shaping and Finishing of Stone 0.234 130.3 131.7 135.4 136.0 136.8 1.3.13.8 Other Non-Metallic Mineral Products 0.169 102.4 100.9 94.1 92.2 92.3 1.3.14 MANUFACTURE OF BASIC METALS 9.646 141.0 138.7 137.2 137.6 139.1 1.3.14.1 Inputs into steel making 1.411 140.3 134.6 129.4 129.2 131.1 1.3.14.2 Metallic Iron 0.653 153.6 147.4 131.5 131.6 136.3 1.3.14.3 Mild Steel - Semi Finished Steel 1.274 119.9 117.0 117.3 117.3 118.2 1.3.14.4 Mild Steel -Long Products 1.081 141.3 138.9 138.5 138.4 140.1 1.3.14.5 Mild Steel - Flat products 1.144 143.4 138.7 128.9 129.6 129.5 1.3.14.6 Alloy steel other than Stainless Steel- Shapes 0.067 137.6 134.3 132.7 132.1 133.6 1.3.14.7 Stainless Steel - Semi Finished 0.924 136.4 131.1 127.5 127.4 131.0 1.3.14.8 Pipes & tubes 0.205 169.7 169.8 163.7 164.1 164.5 1.3.14.9 Non-ferrous metals incl. precious metals 1.693 144.8 146.4 158.6 160.8 161.4 1.3.14.10 Castings 0.925 141.0 146.1 144.2 144.6 144.7 1.3.14.11 Forgings of steel 0.271 173.3 170.8 172.4 169.7 174.2 1.3.15 MANUFACTURE OF FABRICATED METAL PRODUCTS, EXCEPT MACHINERY AND EQUIPMENT 3.155 138.6 136.2 135.3 136.2 136.4 1.3.15.1 Structural Metal Products 1.031 132.3 130.6 130.2 132.0 131.2 1.3.15.2 Tanks, Reservoirs and Containers of Metal 0.660 157.6 155.3 147.2 147.0 148.5 1.3.15.3 Steam generators, Except Central Heating Hot Water Boilers 0.145 106.3 106.0 108.1 108.0 110.9 1.3.15.4 Forging, Pressing, Stamping and Roll-Forming of Metal; Powder Metallurgy 0.383 141.4 136.8 137.9 139.6 139.7 1.3.15.5 Cutlery, Hand Tools and General Hardware 0.208 108.4 101.5 102.3 102.5 102.4 1.3.15.6 Other Fabricated Metal Products 0.728 143.8 142.3 145.3 145.6 145.7 1.3.16 MANUFACTURE OF COMPUTER, ELECTRONIC AND OPTICAL PRODUCTS 2.009 119.3 120.4 121.5 121.5 121.1 1.3.16.1 Electronic Components 0.402 115.0 115.5 118.6 119.0 119.5 1.3.16.2 Computers and Peripheral Equipment 0.336 135.3 135.3 132.7 131.0 131.8 1.3.16.3 Communication Equipment 0.310 136.1 139.5 146.3 146.2 146.5 1.3.16.4 Consumer Electronics 0.641 103.6 103.7 99.9 100.6 99.1 1.3.16.5 Measuring, Testing, Navigating and Control equipment 0.181 113.8 118.2 121.9 121.9 121.9 1.3.16.6 Watches and Clocks 0.076 157.2 159.9 172.7 172.2 172.0 1.3.16.7 Irradiation, Electromedical and Electrotherapeutic equipment 0.055 108.3 108.4 116.1 117.0 110.3 1.3.16.8 Optical instruments and Photographic equipment 0.008 103.8 105.2 107.9 108.3 108.3 1.3.17 MANUFACTURE OF ELECTRICAL EQUIPMENT 2.930 131.4 131.9 134.0 134.1 134.4 1.3.17.1 Electric motors, Generators, Transformers and Electricity distribution and Control apparatus 1.298 130.1 130.6 133.1 133.0 133.5 1.3.17.2 Batteries and Accumulators 0.236 137.8 140.4 140.9 141.5 141.8 1.3.17.3 Fibre optic cables for data transmission or live transmission of images 0.133 123.4 121.2 114.3 115.9 116.0 1.3.17.4 Other electronic and Electric wires and Cables 0.428 146.1 146.9 155.0 155.2 156.6 1.3.17.5 Wiring devices, Electric lighting & display equipment 0.263 116.8 117.6 118.1 117.8 117.5 1.3.17.6 Domestic appliances 0.366 133.8 133.3 131.8 132.0 131.3 1.3.17.7 Other electrical equipment 0.206 120.9 121.8 124.7 124.8 123.8 1.3.18 MANUFACTURE OF MACHINERY AND EQUIPMENT 4.789 129.0 129.9 131.1 131.2 131.5 1.3.18.1 Engines and Turbines, Except aircraft, Vehicle and Two wheeler engines 0.638 128.9 130.6 132.6 134.5 134.3 1.3.18.2 Fluid power equipment 0.162 131.9 132.3 135.6 135.7 135.7 1.3.18.3 Other pumps, Compressors, Taps and Valves 0.552 117.4 117.7 118.9 119.0 119.0 1.3.18.4 Bearings, Gears, Gearing and Driving elements 0.340 127.7 129.6 129.7 128.6 129.1 1.3.18.5 Ovens, Furnaces and Furnace burners 0.008 83.7 85.3 88.3 87.3 88.4 1.3.18.6 Lifting and Handling equipment 0.285 128.6 129.9 130.1 130.0 130.7 RBI Bulletin April 2025 265CURRENT STATISTICS No. 21: Wholesale Price Index (Concld.) (Base: 2011-12 = 100) Commodities Weight 2023-24 2024 2025 Mar. Jan. Feb.(P) Mar.(P) 1 2 3 4 5 6 1.3.18.7 Office machinery and Equipment 0.006 130.2 130.2 130.2 130.2 130.2 1.3.18.8 Other general-purpose machinery 0.437 145.2 144.6 141.9 140.3 142.7 1.3.18.9 Agricultural and Forestry machinery 0.833 142.5 143.9 146.6 147.0 146.5 1.3.18.10 Metal-forming machinery and Machine tools 0.224 122.5 122.4 124.1 123.3 123.5 1.3.18.11 Machinery for mining, Quarrying and Construction 0.371 88.6 89.3 91.0 91.3 91.5 1.3.18.12 Machinery for food, Beverage and Tobacco processing 0.228 124.4 124.4 126.9 127.1 126.8 1.3.18.13 Machinery for textile, Apparel and Leather production 0.192 137.2 137.7 145.1 145.1 147.1 1.3.18.14 Other special-purpose machinery 0.468 144.7 146.4 144.0 144.2 144.4 1.3.18.15 Renewable electricity generating equipment 0.046 70.8 69.7 69.0 69.3 69.3 1.3.19 MANUFACTURE OF MOTOR VEHICLES, TRAILERS AND SEMI-TRAILERS 4.969 128.4 129.9 130.1 130.2 130.3 1.3.19.1 Motor vehicles 2.600 128.5 130.6 131.0 131.0 131.2 1.3.19.2 Parts and Accessories for motor vehicles 2.368 128.2 129.0 129.0 129.3 129.3 1.3.20 MANUFACTURE OF OTHER TRANSPORT EQUIPMENT 1.648 143.1 143.6 145.7 145.9 148.5 1.3.20.1 Building of ships and Floating structures 0.117 163.7 163.7 188.4 188.4 188.4 1.3.20.2 Railway locomotives and Rolling stock 0.110 107.4 108.5 109.2 109.3 109.6 1.3.20.3 Motor cycles 1.302 144.7 145.3 146.0 146.2 149.4 1.3.20.4 Bicycles and Invalid carriages 0.117 137.9 137.6 134.4 134.5 135.4 1.3.20.5 Other transport equipment 0.002 159.2 158.5 165.7 164.9 165.5 1.3.21 MANUFACTURE OF FURNITURE 0.727 159.6 158.4 161.8 162.0 161.9 1.3.21.1 Furniture 0.727 159.6 158.4 161.8 162.0 161.9 1.3.22 OTHER MANUFACTURING 1.064 158.2 164.1 187.8 197.0 201.7 1.3.22.1 Jewellery and Related articles 0.996 157.9 164.3 189.7 199.5 204.4 1.3.22.2 Musical instruments 0.001 187.0 192.0 197.2 199.9 201.4 1.3.22.3 Sports goods 0.012 155.2 154.5 167.7 168.2 168.1 1.3.22.4 Games and Toys 0.005 159.6 160.0 164.8 164.9 164.5 1.3.22.5 Medical and Dental instruments and Supplies 0.049 163.1 161.2 156.5 156.5 158.6 2 FOOD INDEX 24.378 179.8 180.4 191.5 189.0 188.8 Source: Office of the Economic Adviser, Ministry of Commerce and Industry, Government of India. 266 RBI Bulletin April 2025CURRENT STATISTICS No. 22: Index of Industrial Production (Base:2011-12=100) Industry Weight 2022-23 2023-24 April-February February 2023-24 2024-25 2024 2025 1 2 3 4 5 6 7 General Index 100.00 138.5 146.7 145.5 151.4 147.1 151.3 1 Sectoral Classification 1.1 Mining 14.37 119.9 128.9 126.4 130.5 139.7 141.9 1.2 Manufacturing 77.63 137.1 144.7 143.6 149.5 144.4 148.6 1.3 Electricity 7.99 185.2 198.3 197.8 207.6 187.2 194.0 2 Use-Based Classification 2.1 Primary Goods 34.05 139.2 147.7 146.3 152.0 148.2 152.3 2.2 Capital Goods 8.22 100.3 106.6 104.3 110.5 106.7 115.5 2.3 Intermediate Goods 17.22 149.4 157.3 156.2 163.0 157.6 159.9 2.4 Infrastructure/ Construction Goods 12.34 160.7 176.3 174.6 185.7 179.5 191.3 2.5 Consumer Durables 12.84 114.5 118.6 117.5 127.1 121.9 126.5 2.6 Consumer Non-Durables 15.33 147.7 153.7 153.6 151.5 149.9 146.7 Source : Central Statistics Office, Ministry of Statistics and Programme Implementation, Government of India. Government Accounts and Treasury Bills No. 23: Union Government Accounts at a Glance (₹ Crore) Financial Year April – February 2024-25 Percentage to Revised Item (Revised 2024-25 2023-24 Estimates Estimates) (Actuals) (Actuals) 2024-25 2023-24 1 2 3 4 5 1 Revenue Receipts 3087960 2508953 2209782 81.2 81.9 1.1 Tax Revenue (Net) 2556960 2015634 1849452 78.8 79.6 1.2 Non-Tax Revenue 531000 493319 360330 92.9 95.9 2 Non Debt Capital Receipt 59000 37364 36140 63.3 64.5 2.1 Recovery of Loans 26000 21655 23480 83.3 90.3 2.2 Other Receipts 33000 15709 12660 47.6 42.2 3 Total Receipts (excluding borrowings) (1+2) 3146960 2546317 2245922 80.9 81.5 4 Revenue Expenditure 3698058 3081282 2941674 83.3 83.1 of which : 4.1 Interest Payments 1137940 952844 880788 83.7 83.5 5 Capital Expenditure 1018429 811887 805613 79.7 84.8 6 Total Expenditure (4+5) 4716487 3893169 3747287 82.5 83.4 7 Revenue Deficit (4-1) 610098 572329 731892 93.8 87.1 8 Fiscal Deficit (6-3) 1569527 1346852 1501365 85.8 86.5 9 Gross Primary Deficit (8-4.1) 431587 394008 620577 91.3 91.3 Source: Controller General of Accounts (CGA), Ministry of Finance, Government of India and Union Budget 2025-26. RBI Bulletin April 2025 267CURRENT STATISTICS No. 24: Treasury Bills – Ownership Pattern (₹ Crore) 2023-24 2024 2025 Item Mar. 1 Jan. 24 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 1 2 3 4 5 6 7 8 1 91-day 1.1 Banks 18054 9315 6520 7728 5632 7326 7071 7786 1.2 Primary Dealers 22676 18037 14311 13506 17806 15967 14883 14025 1.3 State Governments 5701 16384 78012 78400 82800 82315 78315 73415 1.4 Others 88670 90048 100968 107166 110763 115907 108845 116990 2 182-day 2.1 Banks 84913 74430 39047 36704 35399 38165 35549 37126 2.2 Primary Dealers 87779 76367 46104 51382 50792 53182 52538 54510 2.3 State Governments 4070 5037 8268 8243 8243 7422 7422 7528 2.4 Others 102311 96207 86549 85014 88109 84953 81213 85164 3 364-day 3.1 Banks 91819 86887 72359 73685 74285 73520 69687 66240 3.2 Primary Dealers 159085 172500 108412 109263 106534 112772 110441 112173 3.3 State Governments 41487 44491 34014 36794 36365 36583 36494 36713 3.4 Others 165095 176613 156229 153053 154181 147709 151871 151587 4 14-day Intermediate 4.1 Banks 4.2 Primary Dealers 4.3 State Governments 318736 317650 298216 271755 191566 266338 290903 291002 4.4 Others 442 296 838 694 410 485 2591 38 Total Treasury Bills (Excluding 14 day 871662 866316 750794 760937 770908 775820 754331 763256 Intermediate T Bills) # # 14D intermediate T-Bills are non-marketable unlike 91D, 182D and 364D T-Bills. These bills are ‘intermediate’ by nature as these are liquidated to replenish shortfall in the daily minimum cash balances of State Governments. Note: Primary Dealers (PDs) include banks undertaking PD business. No. 25: Auctions of Treasury Bills (Amount in ₹ Crore) Date of Notified Bids Received Bids Accepted Total Cut- Implicit Yield Auction Amount Total Face Value Total Face Value Issue off at Cut-off Price Number Number (6+7) Price (per cent) Competitive Non- Competitive Non- ( ₹ ) Competitive Competitive 1 2 3 4 5 6 7 8 9 10 91-day Treasury Bills 2024-25 Jan. 29 12000 138 39833 2879 44 11959 2879 14838 98.39 6.5625 Feb. 5 12000 149 41861 6534 42 11966 6534 18500 98.41 6.4681 Feb. 12 12000 117 32652 1424 63 11964 1424 13389 98.42 6.4445 Feb. 20 14000 131 27118 5452 0 0 0 0 - - Feb. 27 14000 136 34624 6168 74 13932 6168 20100 98.42 6.4490 182-day Treasury Bills 2024-25 Jan. 29 8000 84 25022 1019 41 7981 1019 9000 96.78 6.6691 Feb. 5 8000 96 22886 715 55 7985 715 8700 96.82 6.5801 Feb. 12 8000 70 16516 194 42 7984 194 8179 96.83 6.5700 Feb. 20 12000 74 20772 1016 0 0 0 0 - - Feb. 27 12000 96 23642 1775 66 11976 1775 13751 96.81 6.5989 364-day Treasury Bills 2024-25 Jan. 29 8000 138 41006 2931 27 7990 2931 10921 93.79 6.6345 Feb. 5 8000 124 32756 174 31 7987 174 8160 93.87 6.5440 Feb. 12 8000 88 26315 318 44 7968 318 8287 93.87 6.5500 Feb. 20 7000 72 19287 46 32 6990 46 7036 93.86 6.5638 Feb. 27 7000 104 27673 239 33 6988 239 7228 93.88 6.5409 268 RBI Bulletin April 2025CURRENT STATISTICS Financial Markets No. 26: Daily Call Money Rates (Per cent per annum) Range of Rates Weighted Average Rates As on Borrowings/ Lendings Borrowings/ Lendings 1 2 February 01 ,2025 5.50-6.65 6.23 February 03 ,2025 5.10-6.65 6.55 February 04 ,2025 5.10-6.65 6.49 February 05 ,2025 5.15-6.60 6.46 February 06 ,2025 5.15-6.60 6.45 February 07 ,2025 5.15-6.55 6.25 February 10 ,2025 5.15-6.45 6.29 February 11 ,2025 5.15-6.42 6.32 February 12 ,2025 5.15-6.40 6.29 February 13 ,2025 5.15-6.50 6.34 February 14 ,2025 5.15-6.50 6.35 February 15 ,2025 5.25-6.50 5.89 February 17 ,2025 5.15-6.65 6.34 February 18 ,2025 5.25-6.50 6.35 February 20 ,2025 5.15-6.45 6.35 February 21 ,2025 5.15-6.60 6.29 February 24 ,2025 5.15-6.45 6.32 February 25 ,2025 5.15-6.65 6.31 February 27 ,2025 5.15-6.45 6.31 February 28 ,2025 5.15-6.65 6.36 March 01 ,2025 5.70-6.45 5.91 March 03 ,2025 5.15-6.45 6.32 March 04 ,2025 5.15-6.40 6.27 March 05 ,2025 5.25-6.40 6.23 March 06 ,2025 5.15-6.35 6.21 March 07 ,2025 5.15-6.40 6.25 March 10 ,2025 5.15-6.40 6.26 March 11 ,2025 5.15-6.45 6.30 March 12 ,2025 5.15-6.40 6.27 March 13 ,2025 5.15-6.45 6.33 March 15 ,2025 5.25-6.40 6.05 Note: Includes Notice Money. RBI Bulletin April 2025 269CURRENT STATISTICS No. 27: Certificates of Deposit 2024 2025 2025 Item Feb. 23 Jan. 10 Jan. 24 Feb. 7 Feb. 21 Mar. 7 Mar. 21 1 2 3 4 5 6 7 1 Amount Outstanding (₹ Crore) 381444.86 493930.59 499396.94 519276.82 513816.40 511207.89 532971.66 1.1 Issued during the fortnight (₹ Crore) 63348.26 33890.42 30080.60 71093.96 30077.77 70936.37 117053.02 2 Rate of Interest (per cent) 7.17-8.22 7.05-7.48 7.07-7.88 7.03-7.83 7.02-7.93 7.02-8.02 6.98-8.05 No. 28: Commercial Paper Item 2024 2025 2025 Feb. 29 Jan. 15 Jan. 31 Feb. 15 Feb. 28 Mar. 15 Mar. 31 1 2 3 4 5 6 7 1 Amount Outstanding (₹ Crore) 408048.25 450242.05 456483.15 479257.25 465926.95 457051.30 442892.70 1.1 Reported during the fortnight (₹ Crore) 82067.80 39647.30 69001.15 80693.35 64880.85 107624.20 77133.85 2 Rate of Interest (per cent) 7.05-11.91 7.06-12.12 7.12-13.77 6.97-12.40 6.78-12.24 6.67-11.78 7.00-14.46 No. 29: Average Daily Turnover in Select Financial Markets (₹ Crore) Item 2023-24 2024 2025 Mar. 1 Jan. 24 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 1 2 3 4 5 6 7 8 1 Call Money 17761 18315 20631 23225 23493 22880 23232 25329 2 Notice Money 2550 4361 598 4419 269 5854 472 8886 3 Term Money 871 1311 798 976 699 1109 532 1425 4 Triparty Repo 601363 712802 649147 744181 645390 788692 648196 802167 5 Market Repo 574534 652752 525850 606457 568944 658189 521248 627685 6 Repo in Corporate Bond 1817 2620 6711 7411 8450 7343 7841 7237 7 Forex (US $ million) 95115 122015 133491 137918 143060 147352 129410 155172 8 Govt. of India Dated Securities 90992 59429 127533 126216 124531 99396 77969 86173 9 State Govt. Securities 6102 10427 7675 10831 9153 6885 10974 16088 10 Treasury Bills 10.1 91-Day 5378 3740 6107 5708 5072 5368 3585 5438 10.2 182-Day 6079 5309 2691 2525 3052 3390 2016 4596 10.3 364-Day 4307 3685 1893 3326 3273 5458 3548 4148 10.4 Cash Management Bills 0 0 0 0 0 0 0 11 Total Govt. Securities (8+9+10) 112858 82589 145899 148605 145081 120496 98091 116444 11.1 RBI 492 760 4307 5572 249 8342 10385 704 270 RBI Bulletin April 2025CURRENT STATISTICS No. 30: New Capital Issues by Non-Government Public Limited Companies (Amount in ₹ Crore) 2023-24 2023-24 (Apr.-Feb.) 2024-25 (Apr.-Feb.) * Feb. 2024 Feb. 2025 * Security & Type of Issue No. of Amount No. of Amount No. of Amount No. of Amount No. of Amount Issues Issues Issues Issues Issues 1 2 3 4 5 6 7 8 9 10 1 Equity Shares 339 80942 303 76666 443 208151 35 15643 31 15513 1.1 Public 272 65832 246 61976 310 189947 29 7684 21 14745 1.2 Rights 67 15110 57 14690 133 18204 6 7959 10 768 2 Public Issue of 44 16342 41 15639 52 7694 4 517 14 297 Bonds/ Debentures 3 Total (1+2) 383 97284 344 92305 495 215845 39 16160 45 15810 3.1 Public 316 82174 287 77615 362 197641 33 8201 35 15042 3.2 Rights 67 15110 57 14690 133 18204 6 7959 10 768 Note : 1. Since April 2020, monthly data on equity issues is compiled on the basis of their listing date. 2. Figures in the columns might not add up to the total due to rounding off numbers. 3. The table covers only public and rights issuances of equity and debt. It does not include data on private placement of debt, qualified institutional placements and preferential allotments. Source : Securities and Exchange Board of India. * : Data is Provisional RBI Bulletin April 2025 271CURRENT STATISTICS External Sector No. 31: Foreign Trade 2024 2025 2023-24 Item Unit Feb. Oct. Nov. Dec. Jan. Feb. 1 2 3 4 5 6 7 1 Exports ₹ Crore 3618952 343516 327466 269603 321264 313936 321343 US $ Million 437072 41406 38970 31957 37802 36392 36913 1.1 Oil ₹ Crore 696850 68163 37000 29821 39998 30311 50620 US $ Million 84157 8216 4403 3535 4706 3514 5815 1.2 Non-oil ₹ Crore 2922102 275353 290466 239782 281265 283625 270724 US $ Million 352915 33190 34567 28422 33095 32878 31098 2 Imports ₹ Crore 5616042 505408 546768 539310 496988 512696 443664 US $ Million 678215 60919 65069 63926 58479 59432 50964 2.1 Oil ₹ Crore 1480232 140134 158683 134206 115546 115942 103530 US $ Million 178733 16891 18884 15908 13596 13440 11893 2.2 Non-oil ₹ Crore 4135810 365274 388085 405103 381442 396754 340133 US $ Million 499482 44028 46184 48018 44883 45992 39071 3 Trade Balance ₹ Crore -1997090 -161892 -219301 -269707 -175724 -198760 -122321 US $ Million -241143 -19514 -26098 -31969 -20677 -23040 -14051 3.1 Oil ₹ Crore -783382 -71972 -121683 -104386 -75547 -85631 -52911 US $ Million -94576 -8675 -14481 -12373 -8889 -9926 -6078 3.2 Non-oil ₹ Crore -1213708 -89921 -97619 -165321 -100177 -113129 -69410 US $ Million -146567 -10839 -11617 -19596 -11787 -13114 -7973 Note: Data in the table are provisional. Source: Directorate General of Commercial Intelligence and Statistics. No. 32: Foreign Exchange Reserves 2024 2025 Item Unit Apr. 05 Feb. 21 Feb. 28 Mar. 07 Mar. 14 Mar. 21 Mar. 28 1 2 3 4 5 6 7 1 Total Reserves ₹ Crore 5401575 5553750 5589313 5682099 5692791 5662867 5687095 US $ Million 648562 640479 638698 653966 654271 658800 665396 1.1 Foreign Currency Assets ₹ Crore 4756930 4715811 4754944 4841987 4848035 4803678 4829095 US $ Million 571166 543843 543350 557282 557186 558856 565014 1.2 Gold ₹ Crore 454381 646668 641218 645780 647273 664219 664889 US $ Million 54558 74576 73272 74325 74391 77275 77793 Volume (Metric Tonnes) 822.09 879.01 879.01 879.01 879.01 879.01 879.58 1.3 SDRs SDRs Million 13694 13706 13706 13706 13706 13706 13706 ₹ Crore 151325 155830 157504 158222 158894 156784 155344 US $ Million 18170 17971 17998 18210 18262 18240 18176 1.4 Reserve Tranche Position in IMF ₹ Crore 38939 35441 35646 36110 38588 38186 37768 US $ Million 4669 4090 4078 4148 4431 4429 4413 * Difference, if any, is due to rounding off. Note: Exclude investment in foreign currency denominated bonds issued by IIFC (UK), SDRs transferred by Government of India to RBI and foreign currency received under SAARC and ACU currency swap arrangements. Foreign currency assets in US dollar take into account appreciation/depreciation of non-US currencies (such as Euro, Sterling, Yen and Australian Dollar) held in reserves. Foreign exchange holdings are converted into rupees at rupee-US dollar RBI holding rates. No. 33: Non-Resident Deposits (US $ Million) Scheme Outstanding Flows 2024 2025 2023-24 2024-25 2023-24 Feb. Jan. Feb. (P) Apr.-Feb. Apr.-Feb.(P) 1 2 3 4 5 6 1 NRI Deposits 151879 149724 161212 160339 11808 14558 1.1 FCNR(B) 25733 24902 32754 32492 5538 6759 1.2 NR(E)RA 98624 97682 98495 97938 2636 4010 1.3 NRO 27522 27140 29963 29908 3633 3790 P: Provisional. 272 RBI Bulletin April 2025CURRENT STATISTICS No. 34: Foreign Investment Inflows (US $ Million) 2023-24 2024-25 (P) 2024 (P) 2025 (P) Item 2023-24 Apr.-Feb. Apr.-Feb. Feb. Jan. Feb. 1 2 3 4 5 6 1.1 Net Foreign Direct Investment (1.1.1-1.1.2) 10129 11495 1460 -28 1150 -1247 1.1.1 Direct Investment to India (1.1.1.1-1.1.1.2) 26807 24511 26231 1203 3996 2673 1.1.1.1 Gross Inflows/Gross Investments 71279 65179 75105 5006 6061 5471 1.1.1.1.1 Equity 45817 41949 47753 2774 3451 2919 1.1.1.1.1.1 Government (SIA/FIPB) 585 521 1901 47 16 37 1.1.1.1.1.2 RBI 31826 28718 32246 2136 2588 2291 1.1.1.1.1.3 Acquisition of shares 12013 11442 12719 466 759 502 1.1.1.1.1.4 Equity capital of unincorporated bodies 1394 1269 887 125 88 88 1.1.1.1.2 Reinvested earnings 19768 17990 21414 1777 2130 2130 1.1.1.1.3 Other capital 5694 5239 5938 454 479 421 1.1.1.2 Repatriation/Disinvestment 44472 40668 48873 3804 2065 2797 1.1.1.2.1 Equity 41334 37690 47003 3645 2009 2669 1.1.1.2.2 Other capital 3137 2978 1870 159 56 129 1.1.2 Foreign Direct Investment by India 16678 13016 24771 1231 2846 3920 (1.1.2.1+1.1.2.2+1.1.2.3-1.1.2.4) 1.1.2.1 Equity capital 9111 7001 14706 684 1929 2698 1.1.2.2 Reinvested Earnings 5786 5303 6009 482 546 546 1.1.2.3 Other Capital 5406 4101 7323 300 561 1143 1.1.2.4 Repatriation/Disinvestment 3624 3389 3267 235 191 467 1.2 Net Portfolio Investment (1.2.1+1.2.2+1.2.3-1.2.4) 44081 36296 -1210 3746 -6591 -4041 1.2.1 GDRs/ADRs - - - - - - 1.2.2 FIIs 44626 36778 -1398 3808 -6683 -3992 1.2.3 Offshore funds and others - - - - - - 1.2.4 Portfolio investment by India 544 482 -188 62 -91 49 1 Foreign Investment Inflows 54210 47791 250 3718 -5441 -5288 P: Provisional No. 35: Outward Remittances under the Liberalised Remittance Scheme (LRS) for Resident Individuals (US $ Million) 2024 2025 Item 2023-24 Feb. Dec. Jan. Feb. 1 2 3 4 5 1 Outward Remittances under the LRS 31735.74 2013.28 2315.96 2768.89 1964.21 1.1 Deposit 916.45 36.70 48.10 58.20 51.62 1.2 Purchase of immovable property 242.51 15.38 30.14 34.19 28.76 1.3 Investment in equity/debt 1510.89 135.40 179.34 104.98 173.84 1.4 Gift 3580.27 233.91 229.47 232.76 190.82 1.5 Donations 11.31 0.84 0.63 0.63 0.59 1.6 Travel 17006.27 1053.64 1323.64 1646.74 1090.61 1.7 Maintenance of close relatives 4611.53 266.39 279.02 308.76 234.99 1.8 Medical Treatment 79.62 7.25 5.13 4.47 3.43 1.9 Studies Abroad 3478.65 246.82 210.20 368.21 182.17 1.10 Others 298.23 16.96 10.31 9.96 7.38 RBI Bulletin April 2025 273CURRENT STATISTICS No. 36: Indices of Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER) of the Indian Rupee 2024 2025 2023-24 2024-25 Mar Feb Mar Item 1 2 3 4 5 40-Currency Basket (Base: 2015-16=100) 1 Trade-Weighted 1.1 NEER 90.75 91.06 92.07 89.37 89.07 1.2 REER 103.71 105.28 104.53 102.51 101.49 2 Export-Weighted 2.1 NEER 93.13 93.54 94.51 91.99 91.74 2.2 REER 101.22 102.35 101.64 99.75 98.72 6-Currency Basket (Trade-weighted) 1 Base : 2015-16 =100 1.1 NEER 83.62 82.39 83.57 80.93 80.25 1.2 REER 101.66 102.76 101.52 100.26 99.15 2 Base : 2022-23 =100 2.1 NEER 97.31 95.89 97.25 94.18 93.39 2.2 REER 99.86 100.93 99.72 98.48 97.39 Note: Data for 2023-24 and 2024-25 so far is provisional. 274 RBI Bulletin April 2025CURRENT STATISTICS No. 37: External Commercial Borrowings (ECBs) – Registrations (Amount in US $ Million) Item 2024-25 2024 2025 Feb. Jan. Feb. 1 2 3 4 1 Automatic Route 1.1 Number 1188 104 108 107 1.2 Amount 29461 2021 1978 2627 2 Approval Route 2.1 Number 33 3 5 1 2.2 Amount 19748 275 2020 197 3 Total (1+2) 3.1 Number 1221 107 113 108 3.2 Amount 49209 2296 3998 2824 4 Weighted Average Maturity (in years) 5.60 5.80 5.80 5.40 5 Interest Rate (per cent) 5.1 Weighted Average Margin over alternative reference rate (ARR) for Floating Rate Loans@ 1.66 1.77 1.53 1.87 5.2 Interest rate range for Fixed Rate Loans 0.00-27.00 0.00-10.00 0.00-11.00 0.00-11.00 Borrower Category I. Corporate Manufacturing 15836 591 242 1389 II. Corporate-Infrastructure 15916 341 831 527 a.) Transport 1505 75 0 371 b.) Energy 3513 152 398 49 c.) Water and Sanitation 33 0 0 0 d.) Communication 6309 0 13 0 e.) Social and Commercial Infrastructure 115 0 0 0 f.) Exploration,Mining and Refinery 2480 10 207 100 g.) Other Sub-Sectors 1961 104 213 7 III. Corporate Service-Sector 1526 330 115 211 IV. Other Entities 1728 127 1000 0 a.) units in SEZ 1 0 0 0 b.) SIDBI 0 0 0 0 c.) Exim Bank 1727 127 1000 0 V. Banks 0 0 0 0 VI. Financial Institution (Other than NBFC ) 20 0 0 0 VII. NBFCs 13361 902 1792 623 a). NBFC- IFC/AFC 7734 398 1370 472 b). NBFC-MFI 531 11 56 0 c). NBFC-Others 5096 493 366 151 VIII. Non-Government Organization (NGO) 0 0 0 0 IX. Micro Finance Institution (MFI) 0 0 0 0 X. Others 822 5 18 74 Note: Based on applications for ECB/Foreign Currency Convertible Bonds (FCCBs) which have been allotted loan registration number during the period. @ With effect from July 01, 2023, the benchmark rate is changed to Alternative Reference Rate (ARR) RBI Bulletin April 2025 275CURRENT STATISTICS No. 38: India’s Overall Balance of Payments (US$ Million) Oct-Dec 2023 Oct-Dec 2024 (P) Credit Debit Net Credit Debit Net Item 1 2 3 4 5 6 Overall Balance Of Payments (1+2+3) 452267 446269 5998 544591 582251 -37660 1 Current Account (1.1+ 1.2) 236020 246451 -10431 261653 273133 -11480 1.1 Merchandise 106626 178267 -71641 109817 188970 -79153 1.2 Invisibles (1.2.1+1.2.2+1.2.3) 129394 68184 61210 151837 84164 67673 1.2.1 Services 87785 42778 45007 103487 52277 51210 1.2.1.1 Travel 9850 7487 2363 10068 8371 1698 1.2.1.2 Transportation 6950 6457 493 8278 8847 -569 1.2.1.3 Insurance 811 856 -46 870 894 -24 1.2.1.4 G.n.i.e. 182 280 -98 167 307 -139 1.2.1.5 Miscellaneous 69993 27699 42294 84104 33859 50245 1.2.1.5.1 Software Services 41041 4774 36267 47619 6561 41057 1.2.1.5.2 Business Services 22647 14067 8581 29603 18252 11352 1.2.1.5.3 Financial Services 2491 956 1535 2086 741 1346 1.2.1.5.4 Communication Services 701 397 303 580 616 -37 1.2.2 Transfers 31539 2237 29302 36081 2898 33182 1.2.2.1 Official 94 230 -135 89 334 -244 1.2.2.2 Private 31445 2007 29438 35992 2565 33427 1.2.3 Income 10069 23168 -13099 12268 28988 -16720 1.2.3.1 Investment Income 8058 22292 -14233 10088 27943 -17854 1.2.3.2 Compensation of Employees 2010 876 1134 2180 1046 1135 2 Capital Account (2.1+2.2+2.3+2.4+2.5) 216247 198955 17291 282367 309118 -26751 2.1 Foreign Investment (2.1.1+2.1.2) 144352 128388 15964 192195 206344 -14148 2.1.1 Foreign Direct Investment 18875 14923 3952 20783 23560 -2776 2.1.1.1 In India 18309 9947 8362 19870 16218 3653 2.1.1.1.1 Equity 11912 8773 3140 11135 15637 -4501 2.1.1.1.2 Reinvested Earnings 5155 5155 6131 6131 2.1.1.1.3 Other Capital 1242 1175 67 2604 581 2024 2.1.1.2 Abroad 566 4976 -4410 913 7342 -6429 2.1.1.2.1 Equity 566 2355 -1789 913 3211 -2297 2.1.1.2.2 Reinvested Earnings 0 1446 -1446 0 1639 -1639 2.1.1.2.3 Other Capital 0 1174 -1174 0 2493 -2493 2.1.2 Portfolio Investment 125477 113465 12012 171412 182784 -11372 2.1.2.1 In India 124485 112814 11671 170667 182102 -11435 2.1.2.1.1 FIIs 124485 112814 11671 170667 182102 -11435 2.1.2.1.1.1 Equity 108785 102117 6668 144811 156671 -11860 2.1.2.1.1.2 Debt 15701 10697 5003 25856 25431 425 2.1.2.1.2 ADR/GDRs 0 0 0 0 0 0 2.1.2.2 Abroad 991 651 341 745 682 63 2.2 Loans (2.2.1+2.2.2+2.2.3) 25440 28191 -2751 42894 33992 8901 2.2.1 External Assistance 4605 1401 3204 2955 2289 666 2.2.1.1 By India 9 48 -40 6 26 -20 2.2.1.2 To India 4596 1353 3244 2949 2263 686 2.2.2 Commercial Borrowings 6600 11067 -4466 20838 16462 4375 2.2.2.1 By India 2712 4503 -1791 9621 9593 28 2.2.2.2 To India 3888 6564 -2676 11217 6869 4348 2.2.3 Short Term to India 14235 15723 -1489 19101 15241 3860 2.2.3.1 Buyers' credit & Suppliers' Credit >180 days 12535 15723 -3188 14260 15241 -980 2.2.3.2 Suppliers' Credit up to 180 days 1700 0 1700 4840 0 4840 2.3 Banking Capital (2.3.1+2.3.2) 40849 24492 16358 39538 49311 -9774 2.3.1 Commercial Banks 40654 24492 16162 39530 49306 -9776 2.3.1.1 Assets 16550 5276 11274 11853 25923 -14070 2.3.1.2 Liabilities 24103 19215 4888 27677 23383 4294 2.3.1.2.1 Non-Resident Deposits 22381 18461 3921 25912 22771 3141 2.3.2 Others 196 0 196 8 5 2 2.4 Rupee Debt Service 2 -2 0 0 2.5 Other Capital 5606 17884 -12278 7740 19471 -11730 3 Errors & Omissions 0 862 -862 571 0 571 4 Monetary Movements (4.1+ 4.2) 0 5998 -5998 37660 0 37660 4.1 I.M.F. 0 0 0 0 0 0 4.2 Foreign Exchange Reserves (Increase - / Decrease +) 5998 -5998 37660 37660 Note: P: Preliminary. 276 RBI Bulletin April 2025CURRENT STATISTICS No. 39: India’s Overall Balance of Payments (₹ Crore) Oct-Dec 2023 Oct-Dec 2024 (P) Credit Debit Net Credit Debit Net Item 1 2 3 4 5 6 Overall Balance Of Payments (1+2+3) 3766056 3716109 49947 4599615 4917695 -318081 1 Current Account (1.1+ 1.2) 1965353 2052216 -86862 2209923 2306886 -96963 1.1 Merchandise 887883 1484446 -596562 927511 1596038 -668527 1.2 Invisibles (1.2.1+1.2.2+1.2.3) 1077470 567770 509700 1282412 710849 571564 1.2.1 Services 730995 356218 374778 874055 441534 432521 1.2.1.1 Travel 82022 62341 19681 85035 70697 14338 1.2.1.2 Transportation 57875 53767 4108 69915 74723 -4807 1.2.1.3 Insurance 6749 7130 -381 7347 7553 -206 1.2.1.4 G.n.i.e. 1512 2328 -816 1413 2590 -1177 1.2.1.5 Miscellaneous 582837 230650 352187 710344 285971 424373 1.2.1.5.1 Software Services 341751 39756 301995 402186 55417 346769 1.2.1.5.2 Business Services 188585 117135 71450 250030 154153 95877 1.2.1.5.3 Financial Services 20739 7958 12781 17623 6256 11367 1.2.1.5.4 Communication Services 5834 3309 2524 4896 5207 -310 1.2.2 Transfers 262631 18628 244002 304738 24479 280259 1.2.2.1 Official 785 1913 -1127 753 2817 -2064 1.2.2.2 Private 261845 16716 245130 303985 21662 282323 1.2.3 Income 83844 192924 -109080 103619 244836 -141216 1.2.3.1 Investment Income 67103 185626 -118523 85206 236005 -150799 1.2.3.2 Compensation of Employees 16741 7298 9443 18413 8831 9582 2 Capital Account (2.1+2.2+2.3+2.4+2.5) 1800703 1656716 143987 2384871 2610809 -225938 2.1 Foreign Investment (2.1.1+2.1.2) 1202027 1069092 132935 1623281 1742779 -119498 2.1.1 Foreign Direct Investment 157173 124264 32909 175537 198987 -23449 2.1.1.1 In India 152460 82832 69628 167826 136974 30852 2.1.1.1.1 Equity 99194 73050 26144 94049 132068 -38019 2.1.1.1.2 Reinvested Earnings 42926 0 42926 51780 0 51780 2.1.1.1.3 Other Capital 10340 9783 557 21996 4905 17091 2.1.1.2 Abroad 4713 41432 -36718 7712 62013 -54301 2.1.1.2.1 Equity 4713 19610 -14897 7712 27116 -19405 2.1.1.2.2 Reinvested Earnings 0 12044 -12044 0 13842 -13842 2.1.1.2.3 Other Capital 0 9777 -9777 0 21055 -21055 2.1.2 Portfolio Investment 1044854 944828 100026 1447744 1543792 -96048 2.1.2.1 In India 1036599 939411 97188 1441453 1538030 -96577 2.1.2.1.1 FIIs 1036599 939411 97188 1441453 1538030 -96577 2.1.2.1.1.1 Equity 905860 850336 55523 1223076 1323243 -100167 2.1.2.1.1.2 Debt 130739 89075 41664 218376 214787 3590 2.1.2.1.2 ADR/GDRs 0 0 0 0 0 0 2.1.2.2 Abroad 8255 5417 2838 6291 5762 529 2.2 Loans (2.2.1+2.2.2+2.2.3) 211839 234747 -22908 362279 287097 75181 2.2.1 External Assistance 38345 11667 26679 24961 19334 5626 2.2.1.1 By India 72 404 -331 52 217 -166 2.2.1.2 To India 38273 11263 27010 24909 19117 5792 2.2.2 Commercial Borrowings 54961 92153 -37192 175994 139042 36953 2.2.2.1 By India 22583 37494 -14911 81258 81026 232 2.2.2.2 To India 32378 54659 -22281 94736 58016 36720 2.2.3 Short Term to India 118532 130928 -12396 161324 128721 32602 2.2.3.1 Buyers' credit & Suppliers' Credit >180 days 104379 130928 -26549 120442 128721 -8280 2.2.3.2 Suppliers' Credit up to 180 days 14154 0 14154 40882 0 40882 2.3 Banking Capital (2.3.1+2.3.2) 340156 203943 136212 333936 416483 -82547 2.3.1 Commercial Banks 338525 203943 134582 333872 416438 -82566 2.3.1.1 Assets 137815 43936 93879 100112 218949 -118837 2.3.1.2 Liabilities 200710 160008 40702 233760 197489 36271 2.3.1.2.1 Non-Resident Deposits 186372 153723 32648 218851 192322 26530 2.3.2 Others 1630 0 1630 64 45 19 2.4 Rupee Debt Service 0 13 -13 0 0 0 2.5 Other Capital 46682 148921 -102239 65376 164450 -99074 3 Errors & Omissions 0 7177 -7177 4820 0 4820 4 Monetary Movements (4.1+ 4.2) 0 49947 -49947 318081 0 318081 4.1 I.M.F. 0 0 0 0 0 0 4.2 Foreign Exchange Reserves (Increase - / Decrease +) 0 49947 -49947 318081 0 318081 Note: P: Preliminary. RBI Bulletin April 2025 277CURRENT STATISTICS No. 40: Standard Presentation of BoP in India as per BPM6 (US$ Million) Item Oct-Dec 2023 Oct-Dec 2024 (P) Credit Debit Net Credit Debit Net 1 2 3 4 5 6 1 Current Account (1.A+1.B+1.C) 236013 246429 -10416 261647 273103 -11457 1.A Goods and Services (1.A.a+1.A.b) 194412 221046 -26634 213304 241247 -27943 1.A.a Goods (1.A.a.1 to 1.A.a.3) 106626 178267 -71641 109817 188970 -79153 1.A.a.1 General merchandise on a BOP basis 106094 164567 -58473 109391 169503 -60112 1.A.a.2 Net exports of goods under merchanting 532 0 532 426 0 426 1.A.a.3 Nonmonetary gold 0 13701 -13701 0 19467 -19467 1.A.b Services (1.A.b.1 to 1.A.b.13) 87785 42778 45007 103487 52277 51210 1.A.b.1 Manufacturing services on physical inputs owned by others 330 20 310 244 31 213 1.A.b.2 Maintenance and repair services n.i.e. 49 297 -248 82 305 -223 1.A.b.3 Transport 6950 6457 493 8278 8847 -569 1.A.b.4 Travel 9850 7487 2363 10068 8371 1698 1.A.b.5 Construction 1097 624 473 1047 834 213 1.A.b.6 Insurance and pension services 811 856 -46 870 894 -24 1.A.b.7 Financial services 2491 956 1535 2086 741 1346 1.A.b.8 Charges for the use of intellectual property n.i.e. 434 4633 -4199 621 4573 -3952 1.A.b.9 Telecommunications, computer, and information services 41837 5400 36437 48296 7416 40880 1.A.b.10 Other business services 22647 14067 8581 29603 18252 11352 1.A.b.11 Personal, cultural, and recreational services 1006 1464 -459 1148 1242 -95 1.A.b.12 Government goods and services n.i.e. 182 280 -98 167 307 -139 1.A.b.13 Others n.i.e. 103 239 -136 977 465 513 1.B Primary Income (1.B.1 to 1.B.3) 10069 23168 -13099 12268 28988 -16720 1.B.1 Compensation of employees 2010 876 1134 2180 1046 1135 1.B.2 Investment income 6557 21972 -15415 8021 27150 -19128 1.B.2.1 Direct investment 2104 13735 -11631 2558 17331 -14772 1.B.2.2 Portfolio investment 51 1911 -1860 95 2596 -2502 1.B.2.3 Other investment 557 6102 -5545 690 7019 -6329 1.B.2.4 Reserve assets 3845 224 3621 4678 204 4474 1.B.3 Other primary income 1501 320 1181 2067 793 1274 1.C Secondary Income (1.C.1+1.C.2) 31532 2215 29317 36074 2868 33206 1.C.1 Financial corporations, nonfinancial corporations, households, and NPISHs 31445 2007 29438 35992 2565 33427 1.C.1.1 Personal transfers (Current transfers between resident and/non-resident households) 30589 1430 29160 35063 1871 33192 1.C.1.2 Other current transfers 856 578 278 928 694 234 1.C.2 General government 87 208 -120 83 303 -221 2 Capital Account (2.1+2.2) 191 280 -89 185 322 -137 2.1 Gross acquisitions (DR.)/disposals (CR.) of non-produced nonfinancial assets 36 86 -50 16 151 -135 2.2 Capital transfers 155 194 -38 169 171 -2 3 Financial Account (3.1 to 3.5) 216063 204696 11367 319849 308826 11023 3.1 Direct Investment (3.1A+3.1B) 18875 14923 3952 20783 23560 -2776 3.1.A Direct Investment in India 18309 9947 8362 19870 16218 3653 3.1.A.1 Equity and investment fund shares 17067 8773 8295 17266 15637 1629 3.1.A.1.1 Equity other than reinvestment of earnings 11912 8773 3140 11135 15637 -4501 3.1.A.1.2 Reinvestment of earnings 5155 0 5155 6131 6131 3.1.A.2 Debt instruments 1242 1175 67 2604 581 2024 3.1.A.2.1 Direct investor in direct investment enterprises 1242 1175 67 2604 581 2024 3.1.B Direct Investment by India 566 4976 -4410 913 7342 -6429 3.1.B.1 Equity and investment fund shares 566 3801 -3235 913 4849 -3936 3.1.B.1.1 Equity other than reinvestment of earnings 566 2355 -1789 913 3211 -2297 3.1.B.1.2 Reinvestment of earnings 0 1446 -1446 1639 -1639 3.1.B.2 Debt instruments 0 1174 -1174 0 2493 -2493 3.1.B.2.1 Direct investor in direct investment enterprises 0 1174 -1174 2493 -2493 3.2 Portfolio Investment 125477 113465 12012 171412 182784 -11372 3.2.A Portfolio Investment in India 124485 112814 11671 170667 182102 -11435 3.2.1 Equity and investment fund shares 108785 102117 6668 144811 156671 -11860 3.2.2 Debt securities 15701 10697 5003 25856 25431 425 3.2.B Portfolio Investment by India 991 651 341 745 682 63 3.3 Financial derivatives (other than reserves) and employee stock options 5776 7904 -2128 6569 12105 -5536 3.4 Other investment 65936 62407 3529 83424 90377 -6953 3.4.1 Other equity (ADRs/GDRs) 0 0 0 0 0 0 3.4.2 Currency and deposits 22577 18461 4117 25919 22776 3143 3.4.2.1 Central bank (Rupee Debt Movements; NRG) 196 0 196 8 5 2 3.4.2.2 Deposit-taking corporations, except the central bank (NRI Deposits) 22381 18461 3921 25912 22771 3141 3.4.2.3 General government 0 0 0 0 3.4.2.4 Other sectors 0 0 0 0 3.4.3 Loans (External Assistance, ECBs and Banking Capital) 29477 18499 10979 37411 45287 -7876 3.4.3.A Loans to India 26757 13948 12809 27784 35668 -7883 3.4.3.B Loans by India 2721 4551 -1830 9627 9619 8 3.4.4 Insurance, pension, and standardized guarantee schemes 37 158 -121 52 59 -7 3.4.5 Trade credit and advances 14235 15723 -1489 19101 15241 3860 3.4.6 Other accounts receivable/payable - other -390 9566 -9957 941 7015 -6074 3.4.7 Special drawing rights 0 0 0 0 3.5 Reserve assets 0 5998 -5998 37660 0 37660 3.5.1 Monetary gold 0 0 0 0 3.5.2 Special drawing rights n.a. 0 0 0 0 3.5.3 Reserve position in the IMF n.a. 0 0 0 0 3.5.4 Other reserve assets (Foreign Currency Assets) 0 5998 -5998 37660 0 37660 4 Total assets/liabilities 216063 204696 11367 319849 308826 11023 4.1 Equity and investment fund shares 133222 123403 9819 170356 190003 -19647 4.2 Debt instruments 83231 65728 17503 110891 111808 -916 4.3 Other financial assets and liabilities -390 15565 -15955 38601 7015 31586 5 Net errors and omissions 0 862 -862 571 0 571 Note: P: Preliminary. 278 RBI Bulletin April 2025CURRENT STATISTICS No. 41: Standard Presentation of BoP in India as per BPM6 (₹ Crore) Oct-Dec 2023 Oct-Dec 2024 (P) Item Credit Debit Net Credit Debit Net 1 2 3 4 5 6 1 Current Account (1.A+1.B+1.C) 1965295 2052031 -86736 2209867 2306632 -96765 1.A Goods and Services (1.A.a+1.A.b) 1618879 1840663 -221785 1801566 2037572 -236006 1.A.a Goods (1.A.a.1 to 1.A.a.3) 887883 1484446 -596562 927511 1596038 -668527 1.A.a.1 General merchandise on a BOP basis 883452 1370357 -486905 923914 1431621 -507707 1.A.a.2 Net exports of goods under merchanting 4432 0 4432 3597 0 3597 1.A.a.3 Nonmonetary gold 0 114089 -114089 0 164417 -164417 1.A.b Services (1.A.b.1 to 1.A.b.13) 730995 356218 374778 874055 441534 432521 1.A.b.1 Manufacturing services on physical inputs owned by others 2746 163 2583 2061 262 1798 1.A.b.2 Maintenance and repair services n.i.e. 407 2474 -2067 689 2574 -1886 1.A.b.3 Transport 57875 53767 4108 69915 74723 -4807 1.A.b.4 Travel 82022 62341 19681 85035 70697 14338 1.A.b.5 Construction 9139 5196 3942 8843 7044 1799 1.A.b.6 Insurance and pension services 6749 7130 -381 7347 7553 -206 1.A.b.7 Financial services 20739 7958 12781 17623 6256 11367 1.A.b.8 Charges for the use of intellectual property n.i.e. 3611 38576 -34965 5245 38627 -33383 1.A.b.9 Telecommunications, computer, and information services 348376 44964 303412 407907 62636 345271 1.A.b.10 Other business services 188585 117135 71450 250030 154153 95877 1.A.b.11 Personal, cultural, and recreational services 8373 12194 -3820 9693 10492 -799 1.A.b.12 Government goods and services n.i.e. 1512 2328 -816 1413 2590 -1177 1.A.b.13 Others n.i.e. 861 1991 -1130 8255 3926 4329 1.B Primary Income (1.B.1 to 1.B.3) 83844 192924 -109080 103619 244836 -141216 1.B.1 Compensation of employees 16741 7298 9443 18413 8831 9582 1.B.2 Investment income 54604 182963 -128359 67749 229307 -161558 1.B.2.1 Direct investment 17522 114371 -96848 21607 146374 -124767 1.B.2.2 Portfolio investment 425 15915 -15490 800 21930 -21130 1.B.2.3 Other investment 4636 50812 -46176 5827 59279 -53452 1.B.2.4 Reserve assets 32021 1866 30155 39515 1724 37791 1.B.3 Other primary income 12499 2663 9836 17457 6698 10760 1.C Secondary Income (1.C.1+1.C.2) 262572 18444 244128 304682 24225 280457 1.C.1 Financial corporations, nonfinancial corporations, households, and NPISHs 261845 16716 245130 303985 21662 282323 1.C.1.1 Personal transfers (Current transfers between resident and/non-resident households) 254718 11904 242814 296144 15800 280343 1.C.1.2 Other current transfers 7127 4811 2316 7842 5862 1980 1.C.2 General government 727 1728 -1001 697 2563 -1866 2 Capital Account (2.1+2.2) 1590 2328 -739 1564 2720 -1156 2.1 Gross acquisitions (DR.)/disposals (CR.) of non-produced nonfinancial assets 296 715 -419 136 1275 -1139 2.2 Capital transfers 1293 1613 -320 1428 1445 -17 3 Financial Account (3.1 to 3.5) 1799172 1704519 94652 2701444 2608343 93101 3.1 Direct Investment (3.1A+3.1B) 157173 124264 32909 175537 198987 -23449 3.1.A Direct Investment in India 152460 82832 69628 167826 136974 30852 3.1.A.1 Equity and investment fund shares 142120 73050 69070 145829 132068 13761 3.1.A.1.1 Equity other than reinvestment of earnings 99194 73050 26144 94049 132068 -38019 3.1.A.1.2 Reinvestment of earnings 42926 0 42926 51780 0 51780 3.1.A.2 Debt instruments 10340 9783 557 21996 4905 17091 3.1.A.2.1 Direct investor in direct investment enterprises 10340 9783 557 21996 4905 17091 3.1.B Direct Investment by India 4713 41432 -36718 7712 62013 -54301 3.1.B.1 Equity and investment fund shares 4713 31654 -26941 7712 40958 -33246 3.1.B.1.1 Equity other than reinvestment of earnings 4713 19610 -14897 7712 27116 -19405 3.1.B.1.2 Reinvestment of earnings 0 12044 -12044 0 13842 -13842 3.1.B.2 Debt instruments 0 9777 -9777 0 21055 -21055 3.1.B.2.1 Direct investor in direct investment enterprises 0 9777 -9777 0 21055 -21055 3.2 Portfolio Investment 1044854 944828 100026 1447744 1543792 -96048 3.2.A Portfolio Investment in India 1036599 939411 97188 1441453 1538030 -96577 3.2.1 Equity and investment fund shares 905860 850336 55523 1223076 1323243 -100167 3.2.2 Debt securities 130739 89075 41664 218376 214787 3590 3.2.B Portfolio Investment by India 8255 5417 2838 6291 5762 529 3.3 Financial derivatives (other than reserves) and employee stock options 48093 65814 -17720 55483 102239 -46756 3.4 Other investment 549051 519667 29385 704599 763325 -58727 3.4.1 Other equity (ADRs/GDRs) 0 0 0 0 0 0 3.4.2 Currency and deposits 188002 153723 34279 218915 192367 26549 3.4.2.1 Central bank (Rupee Debt Movements; NRG) 1630 0 1630 64 45 19 3.4.2.2 Deposit-taking corporations, except the central bank (NRI Deposits) 186372 153723 32648 218851 192322 26530 3.4.2.3 General government 0 0 0 0 0 0 3.4.2.4 Other sectors 0 0 0 0 0 0 3.4.3 Loans (External Assistance, ECBs and Banking Capital) 245460 154040 91420 315976 382492 -66517 3.4.3.A Loans to India 222804 116142 106662 234666 301249 -66583 3.4.3.B Loans by India 22656 37898 -15242 81310 81243 67 3.4.4 Insurance, pension, and standardized guarantee schemes 306 1315 -1009 437 497 -59 3.4.5 Trade credit and advances 118532 130928 -12396 161324 128721 32602 3.4.6 Other accounts receivable/payable - other -3249 79661 -82910 7947 59249 -51302 3.4.7 Special drawing rights 0 0 0 0 0 0 3.5 Reserve assets 0 49947 -49947 318081 0 318081 3.5.1 Monetary gold 0 0 0 0 0 0 3.5.2 Special drawing rights n.a. 0 0 0 0 0 0 3.5.3 Reserve position in the IMF n.a. 0 0 0 0 0 0 3.5.4 Other reserve assets (Foreign Currency Assets) 0 49947 -49947 318081 0 318081 4 Total assets/liabilities 1799172 1704519 94652 2701444 2608343 93101 4.1 Equity and investment fund shares 1109347 1027586 81762 1438829 1604767 -165939 4.2 Debt instruments 693073 547325 145748 936587 944327 -7740 4.3 Other financial assets and liabilities -3249 129608 -132857 326028 59249 266779 5 Net errors and omissions 0 7177 -7177 4820 0 4820 Note: P: Preliminary. RBI Bulletin April 2025 279CURRENT STATISTICS No. 42: India’s International Investment Position (US$ Million) Item As on Financial Year/Quarter End 2023-24 2023 2024 Dec. Sep. Dec. Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities 1 2 3 4 5 6 7 8 1. Direct investment Abroad/in India 242271 542950 236506 536935 253846 555666 260275 547588 1.1 Equity Capital* 153343 511142 149394 505572 161794 523146 165730 513545 1.2 Other Capital 88927 31808 87112 31363 92053 32520 94545 34043 2. Portfolio investment 12469 276739 11744 268727 12503 293843 12173 276024 2.1 Equity 10942 162061 9523 161206 11241 170934 9356 155573 2.2 Debt 1527 114678 2220 107521 1262 122909 2817 120451 3. Other investment 132654 575284 128316 561466 146714 622795 170554 619611 3.1 Trade credit 33450 123723 31689 123290 32953 130938 33280 135136 3.2 Loan 17547 221894 18510 214954 22147 239779 22523 240977 3.3 Currency and Deposits 53519 154787 44339 149326 56105 164076 68630 165713 3.4 Other Assets/Liabilities 28138 74880 33777 73895 35510 88002 46121 77784 4. Reserves 646419 622452 705782 635701 5. Total Assets/ Liabilities 1033812 1394973 999018 1367128 1118845 1472304 1078704 1443223 6. Net IIP (Assets - Liabilities) -361161 -368110 -353459 -364519 Note: * Equity capital includes share of investment funds and reinvested earnings. 280 RBI Bulletin April 2025CURRENT STATISTICS Payment and Settlement Systems No.43: Payment System Indicators PART I - Payment System Indicators - Payment & Settlement System Statistics System Volume (Lakh) Value (₹ Crore) FY 2023-24 2024 2025 FY 2023-24 2024 2025 Feb. Jan. Feb. Feb. Jan. Feb. 1 -2 -1 0 5 2 3 4 A. Settlement Systems Financial Market Infrastructures (FMIs) 1 CCIL Operated Systems (1.1 to 1.3) 43.04 3.60 4.88 3.72 259206893 21907760 30296790 25171733 1.1 Govt. Securities Clearing (1.1.1 to 1.1.3) 16.80 1.46 1.77 1.16 170464587 14722762 17807347 14137926 1.1.1 Outright 9.51 0.87 1.10 0.63 13463848 1273135 1627265 1088598 1.1.2 Repo 4.94 0.39 0.41 0.33 76718788 6575139 7288494 5916603 1.1.3 Tri-party Repo 2.35 0.20 0.25 0.20 80281951 6874488 8891588 7132725 1.2 Forex Clearing 24.92 2.04 2.94 2.45 80984671 6537554 11164125 9957432 1.3 Rupee Derivatives @ 1.31 0.09 0.17 0.12 7757636 647444 1325318 1076374 B. Payment Systems I Financial Market Infrastructures (FMIs) - - - - - - - - 1 Credit Transfers - RTGS (1.1 to 1.2) 2700.16 238.26 268.15 244.20 170886670 14614297 17499363 16099371 1.1 Customer Transactions 2686.04 237.09 266.89 243.05 152406168 13083464 15571748 14226027 1.2 Interbank Transactions 14.12 1.17 1.26 1.16 18480503 1530833 1927615 1873344 II Retail 2 Credit Transfers - Retail (2.1 to 2.6) 1486106.89 137733.21 186538.41 177394.61 67542859 6039675 7000487 6497660 2.1 AePS (Fund Transfers) @ 3.92 0.32 0.31 0.28 261 21 18 16 2.2 APBS $ 25888.17 2965.77 2263.21 3103.12 390743 48312 52280 57097 2.3 IMPS 60053.35 5346.35 4442.23 4048.29 6495652 568092 606420 563082 2.4 NACH Cr $ 16227.27 1504.81 1304.72 1533.06 1525104 123887 145699 140881 2.5 NEFT 72639.50 6889.23 8567.93 7647.93 39136014 3471495 3848033 3540103 2.6 UPI @ 1311294.68 121026.73 169960.01 161061.93 19995086 1827869 2348037 2196482 2.6.1 of which USSD @ 26.19 1.66 1.38 1.15 352 19 16 13 3 Debit Transfers and Direct Debits (3.1 to 3.3) 18249.53 1611.25 1878.45 1862.80 1687658 153734 199535 193068 3.1 BHIM Aadhaar Pay @ 193.59 15.43 15.79 15.67 6112 376 486 494 3.2 NACH Dr $ 16426.49 1464.78 1715.83 1701.10 1678769 153173 198857 192387 3.3 NETC (linked to bank account) @ 1629.45 131.04 146.83 146.03 2777 184 193 186 4 Card Payments (4.1 to 4.2) 58469.79 4634.92 5522.42 5052.09 2423563 190658 223090 201522 4.1 Credit Cards (4.1.1 to 4.1.2) 35610.15 3112.44 4305.72 3969.59 1831134 149206 184126 167208 4.1.1 PoS based $ 18614.08 1618.50 2177.43 1999.96 651911 54431 69429 62125 4.1.2 Others $ 16996.08 1493.94 2128.29 1969.63 1179223 94775 114697 105083 4.2 Debit Cards (4.2.1 to 4.2.1 ) 22859.64 1522.47 1216.69 1082.50 592429 41452 38963 34314 4.2.1 PoS based $ 16477.95 1108.96 910.91 803.42 393589 27918 25999 23216 4.2.2 Others $ 6381.69 413.51 305.78 279.07 198840 13534 12965 11098 5 Prepaid Payment Instruments (5.1 to 5.2) 78775.40 6470.84 6547.10 6398.44 283048 22674 19496 19236 5.1 Wallets 63256.69 5211.85 4875.14 4850.75 234353 18434 14700 14404 5.2 Cards (5.2.1 to 5.2.2) 15518.71 1259.00 1671.97 1547.69 48695 4240 4796 4833 5.2.1 PoS based $ 8429.87 702.41 701.18 641.84 11247 919 1000 969 5.2.2 Others $ 7088.84 556.58 970.79 905.86 37447 3321 3796 3863 6 Paper-based Instruments (6.1 to 6.2) 6632.10 541.88 516.61 462.02 7212333 602630 606756 540834 6.1 CTS (NPCI Managed) 6632.10 541.88 516.61 462.02 7212333 602630 606756 540834 6.2 Others 0.00 – – – – – – – Total - Retail Payments (2+3+4+5+6) 1648233.71 150992.11 201003.00 191169.95 79149461 7009371 8049363 7452321 Total Payments (1+2+3+4+5+6) 1650933.88 151230.37 201271.14 191414.16 250036131 21623668 25548726 23551692 Total Digital Payments (1+2+3+4+5) 1644301.78 150688.49 200754.53 190952.14 242823799 21021038 24941970 23010857 RBI Bulletin April 2025 281CURRENT STATISTICS PART II - Payment Modes and Channels System Volume (Lakh) Value (₹ Crore) FY 2023-24 2024 2025 FY 2023-24 2024 2025 Feb. Jan. Feb. Feb. Jan. Feb. 1 2 3 4 5 6 7 8 A. Other Payment Channels 1 Mobile Payments (mobile app based) (1.1 to 1.2) 1252599.21 117275.04 158794.78 150031.46 30687088 2828120 3451865 3215517 1.1 Intra-bank $ 83000.56 7774.97 9234.72 8703.42 5676805 530845 607541 558355 1.2 Inter-bank $ 1169598.65 109500.07 149560.06 141328.04 25010283 2297275 2844325 2657162 2 Internet Payments (Netbanking / Internet Browser Based) @ (2.1 to 2.2) 45034.98 3800.36 4167.05 3648.03 102117736 8867591 11639721 10409819 2.1 Intra-bank @ 12033.28 1008.05 1212.87 1003.88 53247042 4540083 6130804 5354635 2.2 Inter-bank @ 33001.71 2792.31 2954.18 2644.15 48870694 4327508 5508917 5055184 B. ATMs 3 Cash Withdrawal at ATMs $ (3.1 to 3.3) 66440.72 5172.34 4910.07 4497.97 3259388 257238 251938 235618 3.1 Using Credit Cards $ 95.80 7.91 7.79 6.84 4648 395 412 370 3.2 Using Debit Cards $ 66001.01 5139.17 4883.53 4473.77 3241538 255809 250646 234408 3.3 Using Pre-paid Cards $ 343.90 25.26 18.75 17.36 13202 1034 879 840 4 Cash Withdrawal at PoS $ (4.1 to 4.2) 15.18 0.55 0.27 0.22 148 5 3 2 4.1 Using Debit Cards $ 15.06 0.53 0.24 0.19 147 5 3 2 4.2 Using Pre-paid Cards $ 0.12 0.01 0.03 0.03 1 0 0 0 5 Cash Withrawal at Micro ATMs @ 11754.95 812.15 915.09 921.64 314003 21543 23246 23605 5.1 AePS @ 11754.95 812.15 915.09 921.64 314003 21543 23246 23605 PART III - Payment Infrastructures (Lakh) System As on March 2024 2025 2024 Feb. Jan. Feb. 1 2 3 4 Payment System Infrastructures 1 Number of Cards (1.1 to 1.2) 10667.22 10612.71 10909.12 10949.92 1.1 Credit Cards 1018.03 1006.00 1088.73 1093.15 1.2 Debit Cards 9649.19 9606.71 9820.39 9856.77 2 Number of PPIs @ (2.1 to 2.2) 16743.63 17118.53 13463.21 13614.38 2.1 Wallets @ 13381.80 13795.76 8954.73 9001.61 2.2 Cards @ 3361.82 3322.78 4508.48 4612.77 3 Number of ATMs (3.1 to 3.2) 2.58 2.57 2.57 2.58 3.1 Bank owned ATMs $ 2.23 2.23 2.21 2.22 3.2 White Label ATMs $ 0.35 0.34 0.36 0.36 4 Number of Micro ATMs @ 17.55 17.01 14.74 14.68 5 Number of PoS Terminals 89.03 87.73 103.53 107.18 6 Bharat QR @ 62.50 61.50 64.43 65.48 7 UPI QR * 3434.93 3371.80 6401.65 6496.91 @: New inclusion w.e.f. November 2019 #: Data reported by Co-operative Banks, LABs and RRBs included with effect from December 2021. $ : Inclusion separately initiated from November 2019 - would have been part of other items hitherto. *: New inclusion w.e.f. September 2020; Includes only static UPI QR Code Note : 1. Data is provisional. 2. ECS (Debit and Credit) has been merged with NACH with effect from January 31, 2020. 3. The data from November 2019 onwards for card payments (Debit/Credit cards) and Prepaid Payment Instruments (PPIs) may not be comparable with earlier months/ periods, as more granular data is being published along with revision in data definitions. 4. Only domestic financial transactions are considered. The new format captures e-commerce transactions; transactions using FASTags, digital bill payments and card-to-card transfer through ATMs, etc. Also, failed transactions, chargebacks, reversals, expired cards/ wallets, are excluded. Part I-A. Settlement systems 1.1.3: Tri- party Repo under the securities segment has been operationalised from November 05, 2018. Part I-B. Payments systems 4.1.2: ‘Others’ includes e-commerce transactions and digital bill payments through ATMs, etc. 4.2.2: ‘Others’ includes e-commerce transactions, card to card transfers and digital bill payments through ATMs, etc. 5. Available from December 2010. 5.1: includes purchase of goods and services and fund transfer through wallets. 5.2.2: includes usage of PPI Cards for online transactions and other transactions. 6.1: Pertain to three grids – Mumbai, New Delhi and Chennai. 6.2: ‘Others’ comprises of Non-MICR transactions which pertains to clearing houses managed by 21 banks. Part II-A. Other payment channels 1: Mobile Payments – o Include transactions done through mobile apps of banks and UPI apps. o The data from July 2017 includes only individual payments and corporate payments initiated, processed, and authorised using mobile device. Other corporate payments which are not initiated, processed, and authorised using mobile device are excluded. 2: Internet Payments – includes only e-commerce transactions through ‘netbanking’ and any financial transaction using internet banking website of the bank. Part II-B. ATMs ` 3.3 and 4.2: only relates to transactions using bank issued PPIs. Part III. Payment systems infrastructure 3: Includes ATMs deployed by Scheduled Commercial Banks (SCBs) and White Label ATM Operators (WLAOs). WLAs are included from April 2014 onwards. 282 RBI Bulletin April 2025CURRENT STATISTICS Occasional Series No. 44: Small Savings (₹ Crore) Scheme 2023-24 2023 2024 Dec. Oct. Nov. Dec. 1 2 3 4 5 1 Small Savings Receipts 232460 16670 10981 9805 11133 Outstanding 1865029 1789946 1962367 1971752 1982465 1.1 Total Deposits Receipts 161344 12386 8792 7469 8734 Outstanding 1298795 1247555 1379283 1386750 1395484 1.1.1 Post Office Saving Bank Deposits Receipts 17229 2279 1062 20 1090 Outstanding 191692 213964 200889 200909 201999 1.1.2 Sukanya Samriddhi Yojna Receipts 35174 2171 1787 1944 2244 Outstanding 157611 104859 172819 174763 177007 1.1.3 National Saving Scheme, 1987 Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.1.4 National Saving Scheme, 1992 Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.1.5 Monthly Income Scheme Receipts 26696 1713 1033 900 827 Outstanding 269007 263383 280416 281316 282142 1.1.6 Senior Citizen Scheme 2004 Receipts 38167 2197 1699 1609 1531 Outstanding 175472 169033 191465 193074 194605 1.1.7 Post Office Time Deposits Receipts 25341 2429 2121 2109 2125 Outstanding 305776 297989 326679 328786 330912 1.1.7.1 1 year Time Deposits Outstanding 140423 135196 155580 157349 159174 1.1.7.2 2 year Time Deposits Outstanding 11967 11265 13910 14093 14299 1.1.7.3 3 year Time Deposits Outstanding 8932 8472 10033 10166 10308 1.1.7.4 5 year Time Deposits Outstanding 144454 143056 147156 147178 147131 1.1.8 Post Office Recurring Deposits Receipts 18713 1616 1238 1023 1025 Outstanding 197134 196491 205221 206244 207269 1.1.9 Post Office Cumulative Time Deposits Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.1.10 Other Deposits Receipts 8 -19 -149 -137 -108 Outstanding 1754 1488 1440 1303 1195 1.1.11 PM Care for children Receipts 16 0 1 1 0 Outstanding 349 348 354 355 355 1.2 Saving Certificates Receipts 56069 3957 2080 2184 2226 Outstanding 418021 407244 434502 436268 438074 1.2.1 National Savings Certificate VIII issue Receipts 16853 1213 637 524 430 Outstanding 183905 177154 191667 192191 192621 1.2.2 Indira Vikas Patras Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.2.3 Kisan Vikas Patras Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.2.4 Kisan Vikas Patras - 2014 Receipts 20939 1568 783 932 1113 Outstanding 220560 216509 226662 227594 228707 1.2.5 National Saving Certificate VI issue Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.2.6 National Saving Certificate VII issue Receipts 0 0 0 0 0 Outstanding 0 0 0 0 0 1.2.7 M.S. Certificates Receipts 18277 1176 660 728 683 Outstanding 18277 15064 23891 24620 25303 1.2.8 Other Certificates Outstanding -4721 -1483 -7718 -8137 -8557 1.3 Public Provident Fund Receipts 15047 327 109 152 173 Outstanding 148213 135147 148582 148734 148907 Note : Data on receipts from April 2017 are net receipts, i.e., gross receipt minus gross payment. Source: Accountant General, Post and Telegraphs. RBI Bulletin April 2025 283CURRENT STATISTICS No. 45 : Ownership Pattern of Central and State Governments Securities (Per cent) Central Government Dated Securities 2023 2024 Category Dec. Mar. Jun. Sep. Dec. 1 2 3 4 5 (A) Total (in ₹. Crore) 10538792 10740389 10946860 11271589 11422728 1 Commercial Banks 37.55 37.66 37.52 37.55 37.98 2 Co-operative Banks 1.49 1.47 1.42 1.35 1.36 3 Non-Bank PDs 0.67 0.66 0.70 0.77 0.65 4 Insurance Companies 26.16 25.98 26.11 25.95 26.14 5 Mutual Funds 3.03 2.90 2.87 3.14 3.11 6 Provident Funds 4.57 4.47 4.41 4.25 4.25 7 Pension Funds 4.44 4.52 4.74 4.86 5.05 8 Financial Institutions 0.55 0.55 0.57 0.63 0.64 9 Corporates 1.33 1.35 1.44 1.60 1.45 10 Foreign Portfolio Investors 1.92 2.34 2.34 2.80 2.81 11 RBI 12.54 12.31 11.92 11.16 10.55 12 Others 5.74 5.79 5.97 5.92 6.01 12.1 State Governments 2.07 2.04 2.13 2.19 2.21 State Governments Securities 2023 2024 Category Dec. Mar. Jun. Sep. Dec. 1 2 3 4 5 (B) Total (in ₹. Crore) 5338587 5646219 5727482 5909490 6055711 1 Commercial Banks 33.90 34.14 33.85 34.39 35.11 2 Co-operative Banks 3.53 3.39 3.38 3.29 3.22 3 Non-Bank PDs 0.63 0.60 0.59 0.60 0.53 4 Insurance Companies 26.64 26.14 25.85 25.56 25.16 5 Mutual Funds 2.00 2.09 2.08 1.93 1.89 6 Provident Funds 22.00 22.35 22.94 23.02 22.90 7 Pension Funds 4.56 4.76 4.87 4.87 4.82 8 Financial Institutions 1.63 1.59 1.58 1.57 1.58 9 Corporates 2.03 2.02 2.03 1.95 1.97 10 Foreign Portfolio Investors 0.03 0.07 0.05 0.04 0.03 11 RBI 0.66 0.63 0.62 0.60 0.58 12 Others 2.37 2.20 2.17 2.18 2.19 12.1 State Governments 0.27 0.25 0.26 0.26 0.26 Treasury Bills 2023 2024 Category Dec. Mar. Jun. Sep. Dec. 1 2 3 4 5 (C) Total (in ₹. Crore) 849151 871662 858193 747242 760045 1 Commercial Banks 57.18 58.53 47.79 44.74 40.45 2 Co-operative Banks 1.28 1.67 1.49 1.58 1.22 3 Non-Bank PDs 1.70 1.66 2.69 2.28 1.41 4 Insurance Companies 5.50 5.06 5.78 5.26 4.73 5 Mutual Funds 11.21 11.89 14.50 15.06 15.41 6 Provident Funds 0.08 0.15 0.60 0.26 0.04 7 Pension Funds 0.00 0.01 0.00 0.00 0.00 8 Financial Institutions 5.34 7.16 6.56 6.36 6.77 9 Corporates 4.58 4.50 4.79 4.66 4.56 10 Foreign Portfolio Investors 0.07 0.01 0.20 0.15 0.12 11 RBI 0.00 0.00 0.00 0.00 0.00 12 Others 13.06 9.36 15.59 19.65 25.29 12.1 State Governments 9.26 5.88 11.55 14.95 20.11 Note: The table format is revised since monthly Bulletin for the month of June 2023. Central Government Dated Securities include special securities and Sovereign Gold Bonds. State Government Securities include special bonds issued under Ujwal DISCOM Assurance Yojana (UDAY). Bank PDs are clubbed under Commercial Banks. The category ‘Others’ comprises State Governments, DICGC, PSUs, Trusts, Foreign Central Banks, HUF/ Individuals etc. Data since September 2023 includes the impact of the merger of a non-bank with a bank. 284 RBI Bulletin April 2025CURRENT STATISTICS No. 46: Combined Receipts and Disbursements of the Central and State Governments (₹ Crore) Item 2019-20 2020-21 2021-22 2022-23 2023-24 RE 2024-25 BE 1 2 3 4 5 6 1 Total Disbursements 5410887 6353359 7098451 7880522 9110725 9800798 1.1 Developmental 3074492 3823423 4189146 4701611 5514584 5862996 1.1.1 Revenue 2446605 3150221 3255207 3574503 3965270 4195108 1.1.2 Capital 588233 550358 861777 1042159 1453849 1526993 1.1.3 Loans 39654 122844 72163 84949 95464 140895 1.2 Non-Developmental 2253027 2442941 2810388 3069896 3467270 3800321 1.2.1 Revenue 2109629 2271637 2602750 2895864 3266628 3537378 1.2.1.1 Interest Payments 955801 1060602 1226672 1377807 1562660 1711972 1.2.2 Capital 141457 169155 175519 171131 196073 259346 1.2.3 Loans 1941 2148 32119 2902 4569 3597 1.3 Others 83368 86995 98916 109015 128871 137481 2 Total Receipts 5734166 6397162 7156342 7855370 9054999 9650488 2.1 Revenue Receipts 3851563 3688030 4823821 5447913 6379349 7209647 2.1.1 Tax Receipts 3231582 3193390 4160414 4809044 5456913 6142276 2.1.1.1 Taxes on commodities and services 2012578 2076013 2626553 2865550 3248450 3631569 2.1.1.2 Taxes on Income and Property 1216203 1114805 1530636 1939550 2204462 2506181 2.1.1.3 Taxes of Union Territories (Without Legislature) 2800 2572 3225 3943 4001 4526 2.1.2 Non-Tax Receipts 619981 494640 663407 638870 922436 1067371 2.1.2.1 Interest Receipts 31137 33448 35250 42975 49552 57273 2.2 Non-debt Capital Receipts 110094 64994 44077 62716 86733 118239 2.2.1 Recovery of Loans & Advances 59515 16951 27665 15970 55895 45125 2.2.2 Disinvestment proceeds 50578 48044 16412 46746 30839 73114 3 Gross Fiscal Deficit [ 1 - ( 2.1 + 2.2 ) ] 1449230 2600335 2230553 2369892 2644642 2472912 3A Sources of Financing: Institution-wise 3A.1 Domestic Financing 1440548 2530155 2194406 2332768 2619811 2456959 3A.1.1 Net Bank Credit to Government 571872 890012 627255 687904 346483 ... 3A.1.1.1 Net RBI Credit to Government 190241 107493 350911 529 -257913 ... 3A.1.2 Non-Bank Credit to Government 868676 1640143 1567151 1644864 2273328 ... 3A.2 External Financing 8682 70180 36147 37124 24832 15952 3B Sources of Financing: Instrument-wise 3B.1 Domestic Financing 1440548 2530155 2194406 2332768 2619811 2456959 3B.1.1 Market Borrowings (net) 971378 1696012 1213169 1651076 1962969 1983757 3B.1.2 Small Savings (net) 209232 458801 526693 358764 434151 447511 3B.1.3 State Provident Funds (net) 38280 41273 28100 13880 21386 19857 3B.1.4 Reserve Funds 10411 4545 42153 68803 52385 -33653 3B.1.5 Deposits and Advances -14227 25682 42203 51989 35819 -10138 3B.1.6 Cash Balances -323279 -43802 -57891 25152 55726 150310 3B.1.7 Others 548753 347643 399980 163104 57374 -100684 3B.2 External Financing 8682 70180 36147 37124 24832 15952 4 Total Disbursements as per cent of GDP 26.9 32.0 30.1 29.2 30.8 30.0 5 Total Receipts as per cent of GDP 28.5 32.2 30.3 29.1 30.7 29.6 6 Revenue Receipts as per cent of GDP 19.2 18.6 20.4 20.2 21.6 22.1 7 Tax Receipts as per cent of GDP 16.1 16.1 17.6 17.8 18.5 18.8 8 Gross Fiscal Deficit as per cent of GDP 7.2 13.1 9.5 8.8 9.0 7.6 … : Not available; RE: Revised Estimates; BE: Budget Estimates Source : Budget Documents of Central and State Governments. Note: GDP data is based on 2011-12 base. GDP for 2024-25 is from Union Budget 2024-25. Data pertains to all States and Union Territories. 1 & 2: Data are net of repayments of the Central Government (including repayments to the NSSF) and State Governments. 1.3: Represents compensation and assignments by States to local bodies and Panchayati Raj institutions. 2: Data are net of variation in cash balances of the Central and State Governments and includes borrowing receipts of the Central and State Governments. 3A.1.1: Data as per RBI records. 3B.1.1: Borrowings through dated securities. 3B.1.2: Represent net investment in Central and State Governments’ special securities by the National Small Savings Fund (NSSF). This data may vary from previous publications due to adjustments across components with availability of new data. 3B.1.6: Include Ways and Means Advances by the Centre to the State Governments. 3B.1.7: Include Treasury Bills, loans from financial institutions, insurance and pension funds, remittances, cash balance investment account. RBI Bulletin April 2025 285CURRENT STATISTICS No. 47: Financial Accommodation Availed by State Governments under various Facilities (₹ Crore) During February-2025 Sr. State/Union Territory Special Drawing Ways and Means Overdraft (OD) No Facility (SDF) Advances (WMA) Average Number Average Number Average Number amount of days amount of days amount of days availed availed availed availed availed availed 1 2 3 4 5 6 7 1 Andhra Pradesh 6564.26 28 1905.35 25 2581.48 9 2 Arunachal Pradesh - - - - - - 3 Assam 277.96 2 - - - - 4 Bihar - - - - - - 5 Chhattisgarh 1092.28 6 - - - - 6 Goa - - - - - - 7 Gujarat - - - - - - 8 Haryana 464.42 11 - - - - 9 Himachal Pradesh - - 500.58 24 264.77 8 10 Jammu & Kashmir UT 18.56 4 386.34 4 - - 11 Jharkhand - - - - - - 12 Karnataka - - - - - - 13 Kerala 1551.31 28 961.17 24 759.21 2 14 Madhya Pradesh - - - - - - 15 Maharashtra - - - - - - 16 Manipur 108.25 28 146.18 28 - - 17 Meghalaya - - - - - - 18 Mizoram - - - - - - 19 Nagaland 100.07 4 - - - - 20 Odisha - - - - - - 21 Puducherry - - - - - - 22 Punjab 4553.66 28 991.24 24 201.58 3 23 Rajasthan 2655.84 25 1435.34 6 - - 24 Tamil Nadu - - - - - - 25 Telangana 4966.69 28 2028.42 28 874.65 15 26 Tripura - - - - - - 27 Uttar Pradesh - - - - - - 28 Uttarakhand 493.48 4 - - - - 29 West Bengal - - - - - - Notes: 1. SDF is availed by State Governments against the collateral of Consolidated Sinking Fund (CSF), Guarantee Redemption Fund (GRF) & Auction Treasury Bills (ATBs) balances and other investments in government securities. 2. WMA is advance by Reserve Bank of India to State Governments for meeting temporary cash mismatches. 3. OD is advanced to State Governments beyond their WMA limits. 4. Average Availed is the total accommodation (SDF/WMA/OD) availed divided by number of days for which accommodation was extended during the month. 5. - : Nil. Source: Reserve Bank of India. 286 RBI Bulletin April 2025CURRENT STATISTICS No. 48: Investments by State Governments (₹ Crore) As on end of February 2025 Consolidated Guarantee Sr. State/Union Government Auction Treasury Sinking Fund Redemption Fund No Territory Securities Bills (ATBs) (CSF) (GRF) 1 2 3 4 5 1 Andhra Pradesh 11642 1149 0 0 2 Arunachal Pradesh 2765 7 0 3300 3 Assam 8321 91 0 0 4 Bihar 12574 - 0 20000 5 Chhattisgarh 8281 495 0 8495 6 Goa 1086 460 0 0 7 Gujarat 15424 672 0 2000 8 Haryana 2640 1716 0 0 9 Himachal Pradesh - - 0 0 10 Jammu & Kashmir UT 19 18 0 0 11 Jharkhand 2433 - 0 780 12 Karnataka 20400 754 0 29966 13 Kerala 3132 - 0 0 14 Madhya Pradesh - 1283 0 0 15 Maharashtra 72256 1756 0 0 16 Manipur 70 141 0 0 17 Meghalaya 1283 109 0 0 18 Mizoram 508 81 0 0 19 Nagaland 1901 46 0 0 20 Odisha 18398 2060 20802 13488 21 Puducherry 583 - 0 1500 22 Punjab 9205 0 0 0 23 Rajasthan 1803 - 0 7700 24 Tamil Nadu 3458 - 0 3627 25 Telangana 7957 1746 0 0 26 Tripura 1232 27 0 0 27 Uttarakhand 5328 260 0 0 28 Uttar Pradesh 10818 421 0 25000 29 West Bengal 13920 1039 0 1500 Total 237436 14331 20802 117356 Notes: 1. CSF and GRF are reserve funds maintained by some State Governments with the Reserve Bank of India. 2. ATBs include Treasury bills of 91 days, 182 days and 364 days invested by State Governments in the primary market. 3. - : Not Applicable (not a member of the scheme). RBI Bulletin April 2025 287CURRENT STATISTICS No. 49: Market Borrowings of State Governments (₹ Crore) 2024-25 Total amount 2022-23 2023-24 raised, so far in December January February 2024-25 Sr. No. State Gross Net Gross Net Gross Net Gross Net Gross Net Amount Amount Amount Amount Amount Amount Amount Amount Amount Amount Gross Net Raised Raised Raised Raised Raised Raised Raised Raised Raised Raised 1 2 3 4 5 6 7 8 9 10 11 12 13 1 Andhra Pradesh 57478 45814 68400 55330 4237 3237 5000 4000 6820 5820 70057 49975 2 Arunachal Pradesh 559 389 902 672 395 315 - - - - 795 569 3 Assam 17100 16105 18500 16000 1800 1100 1000 1000 3650 2650 15700 12050 4 Bihar 36800 27467 47612 29910 6000 3500 8000 5000 7546 6946 47546 31368 5 Chhattisgarh 2000 -2287 32000 26213 - - - -700 4000 2000 10500 4300 6 Goa 1350 500 2550 1560 - - - - - - 1050 250 7 Gujarat 43000 28300 30500 11947 4500 2000 7000 2700 9700 5580 30200 11280 8 Haryana 45158 28638 47500 28364 2000 1150 6000 3400 4500 2750 37500 26020 9 Himachal Pradesh 14000 11941 8072 5856 1000 900 - -300 - -384 6700 4066 10 Jammu & Kashmir UT 8473 5969 16337 13904 1600 1600 920 720 200 200 12870 11330 11 Jharkhand 4000 -155 1000 -2505 - -750 - -2700 - - - -3450 12 Karnataka 36000 26000 81000 63003 16000 13500 16025 13025 13000 10000 72025 52525 13 Kerala 30839 15620 42438 26638 2755 2455 4000 2500 4920 3920 40922 26222 14 Madhya Pradesh 40158 26849 38500 26264 5000 4250 5000 4000 6000 5000 41000 31900 15 Maharashtra 72000 42815 110000 79738 - -3100 18000 15600 14000 9617 99000 66917 16 Manipur 1422 1147 1426 1076 200 200 - -100 250 147 1250 787 17 Meghalaya 1753 1356 1364 912 635 535 - -100 - -125 1882 1069 18 Mizoram 1315 1129 901 641 140 40 119 119 119 119 1049 819 19 Nagaland 1854 1199 2551 2016 250 250 - - - -100 550 100 20 Odisha 0 -7500 0 -4658 - - 1000 500 7000 7000 9000 7000 21 Puducherry 1200 698 1100 475 350 350 - -300 400 400 1300 600 22 Punjab 45500 33660 42386 29517 2500 2200 3900 2500 2000 1250 38830 31926 23 Rajasthan 46057 30110 73624 49718 4800 3800 5000 3000 6000 4326 63565 43809 24 Sikkim 1414 1320 1916 1701 - - - - 488 388 1488 1258 25 Tamil Nadu 87000 65722 113001 75970 11000 10000 10000 7000 13000 9500 101025 69675 26 Telangana 40150 30922 49618 39385 3500 2500 6209 4609 3000 2000 49709 38591 27 Tripura 0 -645 0 -550 - - - - - - - - 28 Uttar Pradesh 55612 41797 97650 85335 12000 8422 5000 3000 9000 5000 35000 15713 29 Uttarakhand 3200 1450 6300 3800 1000 - 1000 350 2000 2000 6400 4750 30 West Bengal 63000 42500 69910 48910 7000 5000 8500 5500 5000 2500 51500 30900 Grand Total 758392 518829 1007058 717140 88662 63454 111673 74323 122593 88504 848413 572320 - : Nil. Note: The State of J&K has ceased to exist constitutionally from October 31, 2019 and the liabilities of the State continue to remain as liabilities of the new UT of Jammu and Kashmir. Source: Reserve Bank of India. 288 RBI Bulletin April 2025CURRENT STATISTICS No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Amount in ` Crore) 2021-22 Item Q1 Q2 Q3 Q4 Annual Net Financial Assets (I-II) 3,42,813 3,30,490 4,85,203 5,54,816 17,13,322 Per cent of GDP 6.6 5.9 7.7 8.5 7.3 I. Financial Assets 3,63,395 5,25,419 8,16,484 9,07,366 26,12,664 Per cent of GDP 7.0 9.3 13.0 13.9 11.1 of which: 1.Total Deposits (a)+(b) (81,064) 2,04,486 4,28,035 2,83,634 8,35,091 (a) Bank Deposits (1,06,429) 1,97,105 4,22,393 2,70,025 7,83,094 i. Commercial Banks (1,07,941) 1,95,442 4,18,267 2,62,326 7,68,094 ii. Co-operative Banks 1,512 1,663 4,126 7,699 15,000 (b) Non-Bank Deposits 25,365 7,380 5,642 13,610 51,997 of which: Other Financial Institutions (i+ii) 17,555 (435) (2,178) 5,770 20,712 i. Non-Banking Financial Companies 5,578 (1,371) 73 4,021 8,302 ii. Housing Finance Companies 11,977 936 (2,252) 1,748 12,410 2. Life Insurance Funds 1,15,539 1,28,277 1,04,076 1,38,998 4,86,889 3. Provident and Pension Funds (including PPF) 1,24,971 1,12,810 95,493 2,18,719 5,51,993 4. Currency 1,28,660 (68,631) 62,793 1,46,845 2,69,667 5. Investments 24,884 82,260 69,715 50,926 2,27,785 of which: (a) Mutual Funds 14,573 63,151 37,912 44,964 1,60,600 (b) Equity 4,502 13,218 27,808 3,084 48,613 6. Small Savings (excluding PPF) 50,405 66,218 56,372 68,243 2,41,238 II. Financial Liabilities 20,583 1,94,929 3,31,281 3,52,550 8,99,343 Per cent of GDP 0.4 3.5 5.3 5.4 3.8 Loans (Borrowings) from 1. Financial Corporations (a+b) 20,479 1,94,825 3,31,178 3,52,446 8,98,928 (a) Banking Sector 21,428 1,38,720 2,67,955 2,74,181 7,02,284 of which: i. Commercial Banks 26,979 1,40,269 2,65,271 3,37,010 7,69,529 (b) Other Financial Institutions (949) 56,105 63,223 78,266 1,96,644 i. Non-Banking Financial Companies (8,708) 30,151 32,177 40,003 93,623 ii. Housing Finance Companies 7,132 24,404 29,495 37,436 98,467 iii. Insurance Corporations 627 1,550 1,551 827 4,554 2. Non-Financial Corporations (Private 34 34 34 34 135 Corporate Business) 3. General Government 70 70 70 70 279 RBI Bulletin April 2025 289CURRENT STATISTICS No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Contd.) (Amount in ` Crore) 2022-23 Item Q1 Q2 Q3 Q4 Annual Net Financial Assets (I-II) 2,89,980 2,99,395 2,96,132 4,54,240 13,39,748 Per cent of GDP 4.5 4.6 4.3 6.4 5.0 I. Financial Assets 5,79,958 6,34,471 7,50,245 9,71,526 29,36,200 Per cent of GDP 8.9 9.8 10.9 13.6 10.9 of which: 1.Total Deposits (a)+(b) 1,85,429 3,17,361 2,80,233 3,25,853 11,08,876 (a) Bank Deposits 1,63,172 2,99,533 2,56,400 3,07,867 10,26,971 i. Commercial Banks 1,58,613 3,00,565 2,48,460 2,84,968 9,92,606 ii. Co-operative Banks 4,559 (1,032) 7,940 22,899 34,365 (b) Non-Bank Deposits 22,257 17,829 23,833 17,986 81,905 of which: Other Financial Institutions (i+ii) 6,505 2,077 8,082 2,234 18,897 i. Non-Banking Financial Companies 4,231 3,267 3,247 3,946 14,690 ii. Housing Finance Companies 2,274 (1,191) 4,835 (1,712) 4,207 2. Life Insurance Funds 73,298 1,51,677 1,67,522 1,56,613 5,49,109 3. Provident and Pension Funds (including PPF) 1,48,915 1,20,367 1,38,584 2,18,709 6,26,575 4. Currency 66,439 (54,579) 76,760 1,48,990 2,37,610 5. Investments 51,503 48,530 49,779 64,151 2,13,962 of which: (a) Mutual Funds 35,443 44,484 40,206 58,955 1,79,088 (b) Equity 13,561 1,378 6,434 1,665 23,038 6. Small Savings (excluding PPF) 54,375 51,115 37,368 57,211 2,00,068 II. Financial Liabilities 2,89,978 3,35,076 4,54,113 5,17,285 15,96,452 Per cent of GDP 4.5 5.2 6.6 7.3 5.9 Loans (Borrowings) from 1. Financial Corporations (a+b) 2,89,781 3,34,880 4,53,917 5,17,089 15,95,667 (a) Banking Sector 2,34,235 2,63,450 3,70,783 3,83,845 12,52,313 of which: i. Commercial Banks 2,30,284 2,61,265 3,68,305 3,31,293 11,91,146 (b) Other Financial Institutions 55,546 71,429 83,134 1,33,244 3,43,354 i. Non-Banking Financial Companies 30,532 36,650 55,792 94,565 2,17,539 ii. Housing Finance Companies 22,337 33,031 24,903 36,746 1,17,017 iii. Insurance Corporations 2,678 1,748 2,439 1,933 8,798 2. Non-Financial Corporations (Private 34 34 34 34 135 Corporate Business) 3. General Government 163 163 163 163 650 290 RBI Bulletin April 2025CURRENT STATISTICS No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Concld.) (Amount in ` Crore) 2023-24 Item Q1 Q2 Q3 Q4 Annual Net Financial Assets (I-II) 3,53,093 2,89,675 2,98,111 6,11,366 15,52,245 Per cent of GDP 5.0 4.1 3.9 7.8 5.3 I. Financial Assets 6,74,763 8,15,842 8,08,779 11,32,130 34,31,514 Per cent of GDP 9.6 11.5 10.7 14.5 11.6 of which: 1.Total Deposits (a)+(b) 2,68,925 4,12,388 2,99,372 4,10,559 13,91,244 (a) Bank Deposits 2,55,249 5,06,208 2,79,872 3,94,573 14,35,902 i. Commercial Banks 2,46,079 5,06,700 2,82,537 3,87,313 14,22,629 ii. Co-operative Banks 9,170 (492) (2,665) 7,260 13,273 (b) Non-Bank Deposits 13,676 (93,820) 19,499 15,986 (44,658) of which: Other Financial Institutions (i+ii) (485) (1,07,982) 5,338 1,825 (1,01,305) i. Non-Banking Financial Companies 6,119 4,782 4,896 1,943 17,740 ii. Housing Finance Companies (6,605) (1,12,764) 442 (118) (1,19,045) 2. Life Insurance Funds 1,58,358 1,41,413 1,61,192 1,30,036 5,90,999 3. Provident and Pension Funds (including PPF) 1,63,508 1,48,178 1,53,255 2,53,719 7,18,661 4. Currency (48,636) (36,701) 56,719 1,46,644 1,18,026 5. Investments 41,409 73,060 79,633 1,08,732 3,02,834 of which: (a) Mutual Funds 32,086 55,769 60,135 90,973 2,38,962 (b) Equity 3,757 7,146 9,941 8,236 29,080 6. Small Savings (excluding PPF) 91,198 77,504 58,607 82,441 3,09,751 II. Financial Liabilities 3,21,670 5,26,167 5,10,667 5,20,764 18,79,269 Per cent of GDP 4.6 7.4 6.7 6.7 6.4 Loans (Borrowings) from 1. Financial Corporations (a+b) 3,21,520 5,26,016 5,10,516 5,20,613 18,78,666 (a) Banking Sector 2,13,606 8,68,874 4,02,647 3,92,330 18,77,458 of which: i. Commercial Banks 2,08,027 8,75,654 3,89,898 3,82,558 18,56,136 (b) Other Financial Institutions 1,07,914 (3,42,858) 1,07,869 1,28,283 1,208 i. Non-Banking Financial Companies 81,449 59,684 85,032 1,00,836 3,27,001 ii. Housing Finance Companies 23,784 (4,04,294) 21,233 25,853 (3,33,424) iii. Insurance Corporations 2,681 1,753 1,604 1,594 7,631 2. Non-Financial Corporations (Private 34 35 35 35 138 Corporate Business) 3. General Government 116 116 116 116 465 Notes : 1. Net Financial Savings of households refer to the net financial assets, which are measured as difference of financial asset and liabilities flows. 2. Preliminary estimates for 2023-24 and revised estimates for 2021-22 and 2022-23. 3. The preliminary estimates for 2023-24 will undergo revision with the release of first revised estimates of national income, consumption expenditure, savings, and capital formation, 2023-24 by the National Statistical Office (NSO). 4. Non-bank deposits apart from other financial institutions, comprises state power utilities, co-operative non credit societies etc. 5. Figures in the columns may not add up to the total due to rounding off. RBI Bulletin April 2025 291CURRENT STATISTICS No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Amount in ` Crore) Item Jun-2021 Sep-2021 Dec-2021 Mar-2022 Financial Assets (a+b+c+d+e+f+g+h) 2,33,27,377 2,39,99,280 2,47,08,474 2,54,40,650 Per cent of GDP 110.4 108.9 108.2 107.8 (a) Bank Deposits (i+ii) 1,07,90,832 1,09,87,937 1,14,10,330 1,16,80,355 i. Commercial Banks 99,53,044 1,01,48,486 1,05,66,753 1,08,29,079 ii. Co-operative Banks 8,37,788 8,39,451 8,43,577 8,51,276 (b) Non-Bank Deposits of which: Other Financial Institutions 2,06,509 2,06,074 2,03,896 2,09,665 i. Non-Banking Financial Companies 67,840 66,469 66,542 70,564 ii. Housing Finance Companies 1,38,669 1,39,605 1,37,353 1,39,102 (c) Life Insurance Funds 49,29,725 51,42,279 52,13,527 53,57,350 (d) Currency 27,42,897 26,74,266 27,37,059 28,83,904 (e) Mutual funds 18,55,000 20,64,364 21,26,112 21,52,141 (f) Public Provident Fund (PPF) 7,57,398 7,62,264 7,67,287 8,34,148 (g) Pension Funds 6,16,517 6,67,379 6,99,173 7,36,592 (h) Small Savings (excluding PPF) 14,28,499 14,94,717 15,51,089 15,86,496 Financial Liabilities (a+b) 77,43,630 79,38,456 82,69,633 86,22,079 Per cent of GDP 36.6 36.0 36.2 36.5 Loans/Borrowings (a) Banking Sector 61,80,377 63,19,097 65,87,052 68,61,233 of which: i. Commercial Banks 56,47,239 57,87,508 60,52,779 63,89,789 ii. Co-operative Banks 5,31,728 5,30,164 5,32,833 4,69,989 (b) Other Financial Institutions 15,63,253 16,19,358 16,82,581 17,60,847 of which: i. Non-Banking Financial Companies 7,36,312 7,66,463 7,98,641 8,38,643 ii. Housing Finance Companies 7,21,510 7,45,914 7,75,408 8,1 2,845 iii. Insurance Corporations 1,05,431 1,06,981 1,08,532 1,09,359 292 RBI Bulletin April 2025CURRENT STATISTICS No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Contd.) (Amount in ` Crore) Item Jun-2022 Sep-2022 Dec-2022 Mar-2023 Financial Assets (a+b+c+d+e+f+g+h) 2,56,21,348 2,64,23,992 2,71,87,716 2,78,44,981 Per cent of GDP 102.8 102.6 103.2 103.3 (a) Bank Deposits (i+ii) 1,18,43,527 1,21,43,060 1,23,99,459 1,27,07,326 i. Commercial Banks 1,09,87,692 1,12,88,257 1,15,36,717 1,18,21,685 ii. Co-operative Banks 8,55,835 8,54,803 8,62,742 8,85,641 (b) Non-Bank Deposits of which: Other Financial Institutions 2,16,170 2,18,247 2,26,328 2,28,562 i. Non-Banking Financial Companies 74,794 78,061 81,308 85,254 ii. Housing Finance Companies 1,41,376 1,40,185 1,45,020 1,43,308 (c) Life Insurance Funds 53,25,967 55,59,682 57,86,593 57,95,431 (d) Currency 29,50,343 28,95,764 29,72,524 31,21,514 (e) Mutual funds 20,48,097 22,60,210 23,55,316 23,67,793 (f) Public Provident Fund (PPF) 8,51,913 8,58,591 8,64,731 9,39,449 (g) Pension Funds 7,44,459 7,96,454 8,53,412 8,98,343 (h) Small Savings (excluding PPF) 16,40,871 16,91,985 17,29,353 17,86,563 Financial Liabilities (a+b) 89,11,861 92,46,741 97,00,657 1,02,17,746 Per cent of GDP 35.8 35.9 36.8 37.9 Loans/Borrowings (a) Banking Sector 70,95,468 73,58,918 77,29,701 81,13,546 of which: i. Commercial Banks 66,20,073 68,81,338 72,49,643 75,80,936 ii. Co-operative Banks 4,73,897 4,76,025 4,78,487 5,30,915 (b) Other Financial Institutions 18,16,393 18,87,823 19,70,956 21,04,201 of which: i. Non-Banking Financial Companies 8,69,175 9,05,825 9,61,617 10,56,182 ii. Housing Finance Companies 8,35,181 8,68,213 8,93,116 9,29,862 iii. Insurance Corporations 1,12,037 1,13,785 1,16,223 1,18,157 RBI Bulletin April 2025 293CURRENT STATISTICS No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Concld.) (Amount in ` Crore) Item Jun-2023 Sep-2023 Dec-2023 Mar-2024 Financial Assets (a+b+c+d+e+f+g+h) 2,87,56,851 2,96,44,299 3,07,47,010 3,19,86,847 Per cent of GDP 104.6 105.4 106.6 108.3 (a) Bank Deposits (i+ii) 1,29,62,575 1,34,68,783 1,37,48,656 1,41,43,228 i. Commercial Banks 1,20,67,764 1,25,74,464 1,28,57,001 1,32,44,314 ii. Co-operative Banks 8,94,811 8,94,319 8,91,655 8,98,914 (b) Non-Bank Deposits of which: Other Financial Institutions 2,28,077 1,20,095 1,25,432 1,27,257 i. Non-Banking Financial Companies 91,373 96,156 1,01,051 1,02,994 ii. Housing Finance Companies 1,36,703 23,939 24,381 24,263 (c) Life Insurance Funds 60,64,437 62,55,801 65,53,726 67,69,272 (d) Currency 30,72,878 30,36,177 30,92,896 32,39,540 (e) Mutual funds 26,26,046 28,29,859 31,56,299 33,87,208 (f) Public Provident Fund (PPF) 9,55,061 9,60,344 9,64,852 10,51,376 (g) Pension Funds 9,70,016 10,17,975 10,91,276 11,72,651 (h) Small Savings (excluding PPF) 18,77,761 19,55,265 20,13,873 20,96,314 Financial Liabilities (a+b) 1,05,39,266 1,10,65,282 1,15,75,799 1,20,96,412 Per cent of GDP 38.3 39.3 40.2 41.0 Loans/Borrowings (a) Banking Sector 83,27,152 91,96,026 95,98,673 99,91,003 of which: i. Commercial Banks 77,88,962 86,64,616 90,54,514 94,37,072 ii. Co-operative Banks 5,36,409 5,29,528 5,42,241 5,51,852 (b) Other Financial Institutions 22,12,114 18,69,256 19,77,126 21,05,409 of which: i. Non-Banking Financial Companies 11,37,631 11,97,315 12,82,347 13,83,183 ii. Housing Finance Companies 9,53,646 5,49,352 5,70,585 5,96,438 iii. Insurance Corporations 1,20,837 1,22,590 1,24,194 1,25,788 Note : 1. Data as ratios to GDP have been calculated based on the Provisional Estimates of National Income 2023-24, released by NSO on May 31, 2024. 2. Pension funds comprises funds with the National Pension Scheme. 3. Outstanding deposits with Small Savings are sourced from the Controller General of Accounts, Government of India. 4. Non-bank deposits apart from other financial institutions, comprises state power utilities, co-operative non credit societies etc. Data for outstanding deposits are available only for other financial institutions. 5. Figures in the columns may not add up to the total due to rounding off. 294 RBI Bulletin April 2025CURRENT STATISTICS Explanatory Notes to the Current Statistics Table No. 1 1.2& 6: Annual data are average of months. 3.5 & 3.7: Relate to ratios of increments over financial year so far. 4.1 to 4.4, 4.8,4.9 &5: Relate to the last friday of the month/financial year. 4.5, 4.6 & 4.7: Relate to five major banks on the last Friday of the month/financial year. 4.10 to 4.12: Relate to the last auction day of the month/financial year. 4.13: Relate to last day of the month/ financial year 7.1&7.2: Relate to Foreign trade in US Dollar. Table No. 2 2.1.2: Include paid-up capital, reserve fund and Long-Term Operations Funds. 2.2.2: Include cash, fixed deposits and short-term securities/bonds, e.g., issued by IIFC (UK). Table No. 4 Maturity-wise position of outstanding forward contracts is available at http://nsdp.rbi.org.in under ‘‘Reserves Template’’. Table No. 5 Special refinance facility to Others, i.e. to the EXIM Bank, is closed since March 31, 2013. Table No. 6 For scheduled banks, March-end data pertain to the last reporting Friday. 2.2: Exclude balances held in IMF Account No.1, RBI employees’ provident fund, pension fund, gratuity and superannuation fund. Table Nos. 7 & 11 3.1 in Table 7 and 2.4 in Table 11: Include foreign currency denominated bonds issued by IIFC (UK). Table No. 8 NM and NM do not include FCNR (B) deposits. 2 3 2.4: Consist of paid-up capital and reserves. 2.5: includes other demand and time liabilities of the banking system. Table No. 9 Financial institutions comprise EXIM Bank, SIDBI, NABARD and NHB. L and L are compiled monthly and L quarterly. 1 2 3 Wherever data are not available, the last available data have been repeated. Table No. 13 Data against column Nos. (1), (2) & (3) are Final and for column Nos. (4) & (5) data are Provisional. RBI Bulletin April 2025 295CURRENT STATISTICS Table No. 14 Data in column Nos. (4) & (8) are Provisional. Table No. 17 2.1.1: Exclude reserve fund maintained by co-operative societies with State Co-operative Banks 2.1.2: Exclude borrowings from RBI, SBI, IDBI, NABARD, notified banks and State Governments. 4: Include borrowings from IDBI and NABARD. Table No. 24 Primary Dealers (PDs) include banks undertaking PD business. Table No. 30 Exclude private placement and offer for sale. 1: Exclude bonus shares. 2: Include cumulative convertible preference shares and equi-preference shares. Table No. 32 Exclude investment in foreign currency denominated bonds issued by IIFC (UK), SDRs transferred by Government of India to RBI and foreign currency received under SAARC and ACU currency swap arrangements. Foreign currency assets in US dollar take into account appreciation/depreciation of non-US currencies (such as Euro, Sterling, Yen and Australian Dollar) held in reserves. Foreign exchange holdings are converted into rupees at rupee-US dollar RBI holding rates. Table No. 34 1.1.1.1.2 & 1.1.1.1.1.4: Estimates. 1.1.1.2: Estimates for latest months. ‘Other capital’ pertains to debt transactions between parent and subsidiaries/branches of FDI enterprises. Data may not tally with the BoP data due to lag in reporting. Table No. 35 1.10: Include items such as subscription to journals, maintenance of investment abroad, student loan repayments and credit card payments. Table No. 36 Increase in indices indicates appreciation of rupee and vice versa. For 6-Currency index, base year 2022-23 is a moving one, which gets updated every year. REER figures are based on Consumer Price Index (combined). The details on methodology used for compilation of NEER/REER indices are available in December 2005, April 2014 and January 2021 issues of the RBI Bulletin. Table No. 37 Based on applications for ECB/Foreign Currency Convertible Bonds (FCCBs) which have been allotted loan registration number during the period. 296 RBI Bulletin April 2025CURRENT STATISTICS Table Nos. 38, 39, 40 & 41 Explanatory notes on these tables are available in December issue of RBI Bulletin, 2012. Table No. 43 Part I-A. Settlement systems 1.1.3: Tri- party Repo under the securities segment has been operationalised from November 05, 2018. Part I-B. Payments systems 4.1.2: ‘Others’ includes e-commerce transactions and digital bill payments through ATMs, etc. 4.2.2: ‘Others’ includes e-commerce transactions, card to card transfers and digital bill payments through ATMs, etc. 5: Available from December 2010. 5.1: includes purchase of goods and services and fund transfer through wallets. 5.2.2: includes usage of PPI Cards for online transactions and other transactions. 6.1: Pertain to three grids – Mumbai, New Delhi and Chennai. 6.2: ‘Others’ comprises of Non-MICR transactions which pertains to clearing houses managed by 21 banks. Part II-A. Other payment channels 1: Mobile Payments – Include transactions done through mobile apps of banks and UPI apps. o The data from July 2017 includes only individual payments and corporate payments initiated, o processed, and authorised using mobile device. Other corporate payments which are not initiated, processed, and authorised using mobile device are excluded. 2: Internet Payments – includes only e-commerce transactions through ‘netbanking’ and any financial transaction using internet banking website of the bank. Part II-B. ATMs 3.3 and 4.2: only relates to transactions using bank issued PPIs. Part III. Payment systems infrastructure 3: Includes ATMs deployed by Scheduled Commercial Banks (SCBs) and White Label ATM Operators (WLAOs). WLAs are included from April 2014 onwards. Table No. 45 (-) represents nil or negligible The table format is revised since monthly Bulletin for the month of June 2023. Central Government Dated Securities include special securities and Sovereign Gold Bonds. State Government Securities include special bonds issued under Ujwal DISCOM Assurance Yojana (UDAY). Bank PDs are clubbed under Commercial Banks. The category ‘Others’ comprises State Governments, DICGC, PSUs, Trusts, Foreign Central Banks, HUF/ Individuals etc. Data since September 2023 includes the impact of the merger of a non-bank with a bank. RBI Bulletin April 2025 297CURRENT STATISTICS Table No. 46 GDP data is based on 2011-12 base. GDP for 2023-24 is from Union Budget 2023-24. Data pertains to all States and Union Territories. 1 & 2: Data are net of repayments of the Central Government (including repayments to the NSSF) and State Governments. 1.3: Represents compensation and assignments by States to local bodies and Panchayati Raj institutions. 2: Data are net of variation in cash balances of the Central and State Governments and includes borrowing receipts of the Central and State Governments. 3A.1.1: Data as per RBI records. 3B.1.1: Borrowings through dated securities. 3B.1.2: Represent net investment in Central and State Governments’ special securities by the National Small Savings Fund (NSSF). This data may vary from previous publications due to adjustments across components with availability of new data. 3B.1.6: Include Ways and Means Advances by the Centre to the State Governments. 3B.1.7: Include Treasury Bills, loans from financial institutions, insurance and pension funds, remittances, cash balance investment account. Table No. 47 SDF is availed by State Governments against the collateral of Consolidated Sinking Fund (CSF), Guarantee Redemption Fund (GRF) & Auction Treasury Bills (ATBs) balances and other investments in government securities. WMA is advance by Reserve Bank of India to State Governments for meeting temporary cash mismatches. OD is advanced to State Governments beyond their WMA limits. Average amount Availed is the total accommodation (SDF/WMA/OD) availed divided by number of days for which accommodation was extended during the month. - : Nil. Table No. 48 CSF and GRF are reserve funds maintained by some State Governments with the Reserve Bank of India. ATBs include Treasury bills of 91 days, 182 days and 364 days invested by State Governments in the primary market. --: Not Applicable (not a member of the scheme). The concepts and methodologies for Current Statistics are available in Comprehensive Guide for Current Statistics of the RBI Monthly Bulletin (https://rbi.org.in/Scripts/PublicationsView.aspx?id=17618) Time series data of ‘Current Statistics’ is available at https://data.rbi.org.in. Detailed explanatory notes are available in the relevant press releases issued by RBI and other publications/releases of the Bank such as Handbook of Statistics on the Indian Economy. 298 RBI Bulletin April 2025RREECCEENNTT PPUUBBLLIICCAATTIIOONNSS Recent Publications of the Reserve Bank of India Name of Publication Price India Abroad 1. 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Banking Glossary (English-Hindi) `100 per copy (over the counter) `150 per copy (inclusive of postal charges) Notes 1. Many of the above publications are available at the RBI website (www.rbi.org.in). 2. Time Series data are available at the Database on Indian Economy (https://data.rbi.org.in). 3. The Reserve Bank of India History 1935-2008 (5 Volumes) are available at leading book stores in India. * Concession is available for students, teachers/lecturers, academic/education institutions, public libraries and Booksellers in India provided the proof of eligibility is submitted. RBI Bulletin April 2025 299RREECCEENNTT PPUUBBLLIICCAATTIIOONNSS General Instructions 1. All communications should be addressed to: Director, Division of Reports and Knowledge Dissemination, Department of Economic and Policy Research (DRKD, DEPR), Reserve Bank of India, Amar Building, Ground Floor, Sir P. M. Road, Fort, P. B. No.1036, Mumbai - 400 001. 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