Page 17 - Policy & Economic Report - June 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

June 2025 Taking the above factors into consideration the policy projects CPI inflation for the financial year 2025-26
at 3.7 per cent, with Q1 at 2.9 per cent; Q2 at 3.4 per cent; Q3 at 3.9 per cent; and Q4 at 4.4 per cent

Repo Rate reduction-

• Policy repo rate is being reduced by 50 basis points (bps) to 5.50 per cent with immediate effect.
• There will be consequent adjustment of the Standing Deposit Facility (SDF) rate under the

Liquidity Adjustment Facility (LAF) to 5.25 per cent and of the Marginal Standing Facility (MSF)
rate and the Bank Rate to 5.75 per cent.
• RBI expects to attain the objective of achieving the medium-term target for consumer price index
(CPI) inflation of 4 per cent within a band of +/- 2 per cent, while stepping up growth momentum.

Manufacturing PMI – India

• India’s economic activity surged in June, with the HSBC Flash Composite Output Index climbing to a
14-month high of 61, indicating a sharp and above-trend expansion in both manufacturing and
services.

• A reading above 50 signals growth, and the index has remained in expansion territory for over three
years. According to Standard and Poor's (S&P) Global, which compiled the survey, manufacturers led
the upturn, supported by rising demand, efficient operations, and technology investments.

• The Flash India Manufacturing Purchasing Managers' Index (PMI) rose to 58.4 in June from 57.6 in
May, while the output index reached 61.5, its highest since April 2024. In the services sector, the
activity index increased to 60.7 from 58.8 in May, reflecting robust momentum.

• A significant rise in new export orders is expected, especially in manufacturing, supported by stronger
demand from Asia, Europe, West Asia, and the United States (US). Employment expanded in both
sectors, though hiring in services slowed slightly on a sequential basis. Despite continued increases in
input and output costs, the rate of inflation showed signs of moderation.

India’s external position

India’s forex reserves

• India's forex reserves increased by $2.29 billion to $698.95 billion for the week ending June 13,
according to Reserve Bank of India.

• For the week ending on June 13, foreign currency assets, a major component of the reserves,
increased $1.73 billion to $589.42 billion.

• Gold reserves increased by $428 million to $86.31 billion during the week. The special drawing
rights were up $85 million to $18.75 billion. India's reserve position with the IMF was also up $43
million at $4.45 billion in the reporting week, according to RBI.

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