India’s growth outlook at risk from trade tensions and geopolitical risks: Finance Ministry #IndiaFinance

Trade tensions and geopolitical risks pose a challenge to India’s economic growth in the fiscal year that started this month, potentially disrupting supply chains and pushing up prices, the Finance Ministry said in its monthly review. “Uncertainties stemming from global developments constitute a key risk for the growth outlook for fiscal year 2025/26,” the ministry said.

The report, prepared by the ministry’s chief economic adviser, warned that beyond trade, the perception of prolonged uncertainty could lead private companies to delay investment plans.

Last week, the International Monetary Fund (IMF) cut its economic growth forecast for India for the current fiscal year, citing increased trade tensions and global uncertainty.

The IMF has lowered its forecast for the South Asian country to 6.2% from the 6.5% it had forecast in January for the fiscal year that started on April 1.

The government said in its report that private companies and policymakers must remain alert to the growing risks and “act urgently” to prevent uncertainty from feeding on itself. It added that the federal government’s projected path for reducing public debt would help boost the pool of domestic savings available for private investment, thereby supporting the economic growth. “In contrast to normal times, action and execution have greater impacts now. It is an opportunity not to be missed,” the government said.