The Finance Ministry on Tuesday said India has an opportunity to strengthen its position in international trade and manufacturing amid global uncertainty, but the private sector and policymakers need to be alert to these challenges and avoid holding back capital generation.
“The perception of prolonged uncertainty may lead the private sector to put capital creation plans on hold,” the Finance Ministry said in its monthly economic review for March. The private sector and policy makers need to be aware of this risk. At the same time, immediate action should be taken to prevent uncertainty from taking over.
Stating that uncertainties arising due to global developments are a risk to growth in FY 2025-26, the Finance Ministry said, ‘With a continued focus on geopolitical developments, India can mitigate these risks. The country can take advantage of emerging opportunities in strategic trade dialogue, domestic reforms and manufacturing investments.
Emphasizing the importance of private capital creation for India’s long-term growth, the Finance Ministry said, “Both government policy and regulatory measures can help the private sector play its role.”
It said, ‘It is time for the private sector to diversify its products and improve quality, as easy options are now a thing of the past.’ The Survey said that capital formation can create a mutually reinforcing cycle of investment-income, growth-demand, growth-additional capacity creation for the larger domestic economy.
It said, ‘Unlike normal days, the impact of action and implementation is now greater. This is an opportunity which should not be missed. While global growth faces a downside risk due to geopolitical tensions, supply chain disruptions, tariff and trade uncertainties, the government’s outlook on the Indian economy remains positive.
The Finance Ministry said that despite the turbulent global scenario, the economy continues to show resilience and the growth momentum is being supported by reduced inflation pressure, rising consumption demand, fiscal discipline, stability in the labor market and the resilience of the financial sector.
The report said that removing compliance, verification and logistics difficulties has become more important than ever before.
The March review also said the overall inflation outlook had improved, supported by interest rate cuts, and food prices were on track, but cautioned that geopolitical uncertainties needed to be monitored.
First Published – April 29, 2025 | 10:28 PM IST
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