Indian govt closely watching but not ‘unduly worried’ about global developments, says official

The Indian economy is increasingly integrated with the world and is bound to face “spillover” impact of global developments, a senior government official said on Friday.

The US Fed rate cut, China stimulus, moderate recovery in Japanese economy and the escalating crisis in the Middle East – are some of the factors pulling in different directions.

Under these circumstances, the Indian markets and economy are bound to see some impact, particularly as some of these challenges are unlikely to wane in the near future, the official explained.

However, the government is closely watching the developments and is not “unduly worried”, the official said, adding that India’s retail investors are now equally big or bigger players than the FPIs in the equity markets. The official also said the Indian economy is resilient and the country needs to keep building on this resilience to weather global shocks.

As India is among the largest crude oil importers, the government cannot control crude oil prices but has the tools to deal with volatile prices, the official said. In 2021 and 2022, the government cut excise duties while in 2024, fuel retailers reduced prices on softer crude.

Crude oil has not touched $90-$95/ barrel levels and India has faced higher crude prices in the past, the official explained.

The official said India’s steadfast adherence to the fiscal consolidation programme is one of the crucial steps towards building economic resilience, helping create buffers and leaving enough legroom for private players to invest.