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Despite international challenges like geopolitical tensions in the Middle East, fluctuations in international crude oil prices, high interest rates in developed countries and sluggish pace of global trade, the Indian economy continues to maintain its position as a strong and stable ‘bright spot’. The Secretary of the Department of Economic Affairs (DEA), Union Finance Ministry, while sharing a detailed review on the macroeconomic fundamentals of the country amid the uncertainties prevailing globally, has clarified that India’s economy stands on a completely capable and self-reliant basis to withstand external shocks. He underlined that strong domestic consumption, continuously increased capital expenditure (Capex) by the government on infrastructure, improving manufacturing activities and fiscal discipline are the key pillars on the basis of which the country is moving rapidly towards a sustainable GDP growth rate of 6.5 to 7 percent.
India’s projections have remained stable or positive even as global rating agencies, the International Monetary Fund (IMF) and the World Bank have cut the growth projections of major global economies. Top officials of the Finance Ministry believe that India’s growth story is not dependent only on external export cycles, but the country’s internal market, digitization, stable banking sector and financial policies are acting as a safety net to protect the economy from any global turmoil.
The Economic Affairs Secretary of the Finance Ministry said that despite signs of global recession, India’s real strength lies in its large and flexible ‘domestic consumption’. Consumer demand is witnessing a steady improvement in both rural and urban areas of the country.
The record sales recorded in the automobile, electronics, real estate and retail sectors in the recent festive season are direct evidence that purchasing power at the domestic level remains strong. Along with this, good yield of Kharif crops due to favorable monsoon in the agricultural sector and positive prospects of the upcoming Rabi season have strengthened rural income. When internal demand contributes more than 60 percent to a country’s economy, the impact of a short-term decline in global exports on overall growth is limited.
The Secretary laid special emphasis on the central role of the historic Capital Expenditure on infrastructure by the Central Government in boosting the economy. In the budget for the financial year 2026-27, the government has maintained the capex allocation at the level of more than Rs 11 lakh crore, the direct impact of which is visible on the ground.
This government capital being invested in construction of railways, national highways, expressways, dedicated freight corridors, multi-modal logistics parks and new airports is creating a ‘crowd-in’ effect in attracting private sector investment (Private Capex). Infrastructure development is creating demand in key core industries like cement, steel, engineering and heavy machinery, thereby not only increasing economic productivity but also creating millions of direct and indirect employment opportunities at the grassroots level.
One of the biggest parameters to judge the stability of the economy is the banking and financial structure of the country. The Secretary said that today India’s banking system is in its strongest phase in the last several decades. Due to the strict regulatory guidelines of the Reserve Bank of India (RBI) and prudent loan distribution by the banks, the Gross NPA of the banks has come down to the lowest level in a decade (about 2.5% to 2.8%).
The balance sheets of banks are completely clean and their capital adequacy ratio (CRAR) is at a safe level as per international standards (Basel-3). Due to this, banks are providing adequate credit (loans) to the corporate sector, MSME and retail sector without any financial stress. A strong financial system ensures uninterrupted flow of capital to domestic industries in times of global liquidity crisis.
Reiterating India’s commitment to fiscal discipline (Fiscal Consolidation), the Secretary of the Finance Ministry said that the government is completely firm on the goal of reducing the fiscal deficit as per the decided roadmap. The target of bringing fiscal deficit below 4.9 per cent of GDP in the current financial year and below 4.5 per cent by 2026-27 is moving in the right direction. The continuous double digit growth in Direct Tax and GST collections has provided additional strength to the government exchequer.
On the external sector front, on the other hand, the country’s foreign exchange reserves remain at historic high levels of $700 billion. This huge reserves is enough to cover import expenses for about 11 to 12 months. Such huge foreign exchange reserves give the central bank effective leverage to stem excessive fluctuations in the exchange rate of the rupee and maintain the confidence of foreign portfolio investors (FPIs).
Although economic indicators are showing a strong situation, the Finance Ministry has also made it clear that the government is fully alert to global risks. The rising costs of logistics and shipping freight due to tensions over merchant shipping in the Red Sea and the Middle East, and disruptions in the supply of imported raw materials due to geopolitical polarization in some developed countries, are being continuously monitored.
The Secretary concluded that India, through structural reforms (such as GST, PLI schemes, labor reforms and comprehensive digitalisation), has made its economy so resilient that it can continue its growth journey at an uninterrupted pace even amidst external storms. India stands on the most solid and stable ground to achieve its goal of becoming the world’s third largest economic superpower in the coming years.