IGI Logo

A finance ministry report has said that with the right strategies in place, continued domestic reforms, and a strong focus on infrastructure development and job creation, Indian economy can demonstrate resilient growth despite global uncertainties. The March edition of Monthly Economic Review released by Department of Economic Affairs said India's long-term growth is driven by macroeconomic stability, a resilient external sector, declining fiscal deficit, easing inflation, improving employment prospects, and high consumption expenditure.

The report said private capital formation holds the key to the sustainability of this favourable constellation, and added that public policy and regulatory measures can both facilitate and nudge the private sector to do its part. Nevertheless, it said, while geopolitical uncertainties present challenges for India, too, they also offer an opportunity to strengthen its position in international trade and manufacturing by leveraging its comparative advantages in select goods and services. With renewed and sustained focus on geopolitical developments, India can mitigate these risks and capitalise on emerging opportunities through strategic trade negotiations, domestic reforms and manufacturing investments. That said, uncertainties stemming from global developments constitute a key risk for the growth outlook for FY26. More than trade, the perception of prolonged uncertainty may cause the private sector to put its capital formation plans on hold. 

It further said the private sector and policymakers must be mindful of this risk and act urgently to avoid making uncertainty feed upon itself. The domestic economy is large and capital formation can lead to a mutually reinforcing cycle of investment-income growth-demand growth-additional capacity creation. In contrast to normal times, action and execution have greater impacts now. It is an opportunity not to be missed. With the government's strong commitment to fiscal consolidation, it said, the availability of domestic savings to finance private sector investment has improved.