In its Monthly Economic Review for May, India's Department of Economic Affairs (DEA) characterized the country's near-term economic outlook as one of 'cautious resilience' amid global shocks, particularly from the West Asia conflict. Despite challenges such as elevated crude prices and a below-normal monsoon, domestic fundamentals remain strong, with manufacturing and services Purchasing Managers' Indices (PMIs) in expansionary territory and stable labor market conditions. However, the DEA cautioned about rising inflation pressures, noting a divergence between retail inflation at 3.48% and wholesale inflation surging to 8.3%. The report also highlighted a historical peak in Gross Foreign Direct Investment (FDI) inflows at $94.5 billion for FY26, signaling long-term investor interest. Industrial activity showed resilience in sectors like cement and steel, supported by infrastructure demand. The DEA concluded that navigating the economic landscape in FY27 will require agile policy responses to maintain growth momentum and control inflation, especially in light of potential food price pressures from a deficient monsoon.