Indian Economy's Resilient Journey Amid Global Uncertainties

The Indian economy is advancing robustly, propelled by strong domestic demand and sound financial health. While banks' balance sheets are stable, external uncertainties pose risks. The RBI expects a further reduction in non-performing assets, indicating resilient banks with sufficient capital buffers. The GDP growth remains strong, driven by consumption and investment.

The latest Reserve Bank report heralds the robust growth of India's economy, citing strong domestic demand and low inflation as key driving factors. Released on Wednesday, the Financial Stability Report highlights the sound health of Indian banks, amid the backdrop of low financial market volatility.

Despite positive domestic conditions, the report flags potential short-term risks from external geopolitical and trade uncertainties. It underscores the Indian financial system's resilience, noting improvements in capital and asset quality among scheduled commercial banks, bolstered by robust profitability.

The report forecasts a further decrease in the gross non-performing assets ratio to 1.9% by March 2027, demonstrating the banking sector's ability to withstand economic shocks. Supported by strong GDP growth in early 2025-26 and an optimistic outlook, the Indian economy remains poised for continued expansion.

(With inputs from agencies.)