Mixed outlook

The Indian economy, often hailed as a resilient force among emerging markets, has begun 2025 with a mix of optimism and caution.

Growth slowed to 6 per cent in the first half of FY 2024-25, but the Reserve Bank of India (RBI) now expects a recovery in the second half, forecasting an annual growth rate of 6.6 per cent. While this may reflect stability to some, sustaining long-term momentum will require addressing significant challenges on the horizon. RBI Governor Sanjay Malhotra's first Financial Stability Report highlighted the health of India's financial system. Declining non-performing assets, strong bank profitability, and solid capital reserves lie at the heart of the system's ability to withstand shocks. Stress tests confirm that banks and non-banking financial companies (NBFCs) are well-prepared for adverse scenarios. In case the need arises, this could reinforce the confidence in the financial sector.