Page 56 - Policy Economic Report - April 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

favourable trend is supported by robust kharif arrivals and a sharp fall in inflation expectations over the
next three and twelve months, as reflected in recent surveys. The decline in crude oil prices has further
strengthened the disinflationary outlook. Accordingly, Consumer Price Index (CPI) inflation for 2025–26
is projected at 4.0 per cent, with quarterly estimates at 3.6 per cent in Q1, 3.9 per cent in Q2, 3.8 per cent
in Q3, and 4.4 per cent in Q4.

While the inflation outlook appears stable, global uncertainties and the possibility of weather-related
supply shocks continue to pose upside risks to the inflation path. The Reserve Bank of India has assumed
a normal monsoon in framing its projections, and it considers the risks to be evenly balanced at this stage.

External Sector Snapshot

• Robust Services and Remittances: Services exports remained strong in January–February 2025,
led by software, business, and transportation services. Net services and remittance receipts are
expected to remain in large surplus, cushioning the merchandise trade deficit.

• Sustainable Current Account Deficit: The current account deficit (CAD) for both 2024–25 and
2025–26 is projected to stay well within sustainable levels, supported by resilient external inflows.

• Mixed Investment Flows: While gross FDI remained strong due to stable macroeconomic
fundamentals, net FDI moderated because of higher repatriations and outward investments. Net
FPI inflows touched USD 1.7 billion in 2024–25, driven by debt inflows despite equity outflows.

• Healthy Forex Reserves: As of April 4, 2025, India’s foreign exchange reserves stood at USD 676.3
billion, offering an import cover of nearly 11 months and reflecting the strength of the external
sector.

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