Overall, the economy continues to exhibit resilience, although emerging signs of moderation in industrial activity, along with evolving inflationary pressures, demand closer attention ahead, it said in its monthly review.
Easing oil prices and improving global supply-chain conditions may help alleviate some external pressures, the Ministry said.
Global energy market stress eased in June 2026 as progress in U.S.-Iran negotiations helped moderate crude oil prices, it said.
Nevertheless, ongoing disruptions to oil production and shipping through the Strait of Hormuz, together with persistent geopolitical uncertainties, pose risks to global growth and inflation, the review said.
Economic activity maintained its momentum in the early months of 2026-27, as reflected in high-frequency indicators such as e-way bill generation, PMI indices and electricity consumption, although some moderation was visible in select indicators, the Ministry said.
Supportive reservoir levels and adequate fertiliser availability continued to provide favourable conditions for agricultural activity. However, the weak progress of the southwest monsoon has weighed on kharif sowing, and the monsoon rainfall deficit is a concern, it added.
Among the many things India needs to build buffers for in the coming years, water may be at the top of the list, it said.
Early trends in 2026-27 indicate that momentum in public investment has been sustained, with capital expenditure continuing to grow, the Ministry said.
Growth in the Index of Eight Core Industries moderated to 0.5 per cent year-on-year in May 2026; however, robust expansion in steel, cement and electricity underscored the resilience of domestic infrastructure and construction activity amid heightened geopolitical uncertainties, it said.
Foreign Direct Investment (FDI) remained resilient, reflecting continued investor confidence in the Indian economy, although portfolio equity flows remained negative amid global uncertainty and lingering valuation concerns, the Ministry said.
Foreign exchange reserves stayed at comfortable levels, providing an important buffer against external shocks, and recent measures to facilitate foreign capital inflows are expected to support external sector stability, it said.