India’s growth story is a hot topic of discussion these days. 8%? Global headwinds for the Indian economy began from the second half of 2025 when the Donald Trump administration’s reciprocal tariffs came into effect at 50%.
Yet, the economy has shown resilience in the face of multiple crises. GDP growth is just one aspect of the story. Foreign exchange reserves have recently hit an all-time high.
GST collections - an important high frequency indicator - are robust.
India’s exports have successfully diversified into new markets even as Free Trade Agreements load in the background to provide a supportive effect.
India’s domestic economy its biggest strengthThe roots of the resilience lie in India’s domestic consumption-led growth story that provides an important cushion against global headwinds.
And this consumption got an important stimulus from April 2025 from when income up to Rs 12 lakh became tax free. 9%. But despite facing an imminent supply crisis, the government worked to diversify further its energy procurement basket, effectively mitigating the constraints with minimum disruptions.
But supply issues were just one part of the story.
Crude oil prices globally rose to beyond $120 per barrel, putting pressure on oil marketing companies to raise petrol and diesel prices.
To begin with, the government absorbed the oil price shock by reducing excise duties on both fuels, in effect shielding consumers from the impact of higher rates.
5 million tonnes. “The most effective strategy that the government has deployed has been to manage India’s energy imports with no major supply disruption. 0 in July, before rising again to above $97 recently.
“The recent rebound in crude prices warrants monitoring, but its full pass-through to domestic prices and activity will become clearer in the coming months.
Forex Reserves At Record HighIndia has over the past few years built a credible foreign exchange reserves shield that is enough to cover around 11 months of exports.
But the start of the conflict put further pressure on an already depreciating rupee and higher oil prices added to the import bill bringing forex reserves in focus.
