“Domestic economic activity held up, with improving kharif agricultural season prospects, continuation of strong momentum in the services sector and modest growth in industrial activity,” it said.

It noted that headline retail inflation remained below 4 per cent for the fifth consecutive month in June driven by deflation in food prices.

Also, system liquidity remained in surplus to facilitate a faster transmission of policy rate cuts to the credit markets.

The external sector remained resilient, backed by ample foreign exchange reserves and a moderate external debt-to-GDP ratio, it added.

The central bank, however, said the views expressed in the Bulletin article are of the authors and do not represent the views of the Reserve Bank of India. PTI NKD HVA