Despite global challenges, India’s foreign exchange reserves are comfortable on the external front, and the Indian rupee has been one of the most resilient vis-à-vis the US dollar in recent months. From the fiscal angle, robust trends in the capital spending of the general government during April-February of FY24, combined with the fiscal consolidation plans reflected in the Budget for FY25, have laid to rest concerns about debt sustainability. Thus, the significant pillars of India’s macroeconomic strength, including growth, price stability, and fiscal management, are directionally positive and mutually reinforcing—the unrelenting geopolitical tensions and volatility in global commodity prices, especially petroleum products, present challenges. However, the expectation is that the macroeconomic buffers nurtured and strengthened during the post-Covid management of the economy will help the Indian economy navigate these challenges reasonably smoothly.
