The government plans to push ahead with reforms, including further measures to boost foreign investment, speeding up divestment and asset monetisation, as it seeks to preserve India’s growth momentum in the face of rising fuel and fertiliser import costs triggered by the West Asia crisis, government sources said on Tuesday.
They said that the country’s GDP growth momentum remains intact, with domestic consumption holding up.
“Growth is not under stress, but there are external challenges… Quarter after quarter, growth is showing momentum. Domestic economy is doing good, consumptions are not coming down…,” sources said.
The stress that India is facing currently in terms of high oil and fertiliser import bills due to the closure of the Strait of Hormuz are “not just the normal kind of uncertainties”, they said.
Sources said the government would continue to pursue financial-sector reforms aimed at deepening capital markets and attracting long-term foreign capital.
There are steps required, and India will be taking them up steadily on boosting FDI flows into the country, sources said.
Recent measures to support the rupee and improve market accessibility are intended to strengthen India’s case for inclusion in major global bond indices, while helping broaden the investor base for domestic securities and lower borrowing costs over time.
Last Friday, the government introduced a series of reforms to increase Foreign Portfolio Investor (FPI) participation in Government Securities (G-Secs) to deepen the capital market.
Key measures included tax exemptions on interest income, long-term capital gains (LTCG) and short-term capital gains (STCG), expansion of specified securities under the Fully Accessible Route (FAR), and streamlined investment norms.
The economy, they said, is facing headwinds from rising fuel and fertiliser import costs linked to the West Asia crisis, but growth momentum remains intact as domestic consumption stays resilient.
Sources said the government sees no immediate need for additional borrowing or supplementary spending approvals in the upcoming monsoon session of Parliament, with the FY27 Budget having already factored in uncertainties stemming from global trade tensions and tariff-related disruptions.
The growth momentum seen in the January-March quarter is continuing in the first quarter of FY27, sources said, adding that there has been no adverse impact on remittance inflows so far.
“We have no indications that remittances have come down so far,” sources added.
India’s economy grew at a higher pace of 7.7 per cent during 2025-26 as compared to 7.1 per cent in 2024-25, according to government data released on Friday.
The same day RBI slashed its FY27 GDP growth forecast to 6.6 per cent from 6.9 per cent, citing rising risks from the ongoing West Asia conflict, elevated energy prices, supply disruptions and weather-related uncertainties.
