The country, therefore, has to reinvent itself and reimagine its responses against such a backdrop, it said, pushing for swifter policy responses and reforms to woo both foreign and domestic investors, among other objectives. Upside risks to inflation, fiscal and current account deficits and downside risks to growth persist, the ministry warned in its monthly economic review for July.
The rebound in global crude oil prices, if sustained, could re-emerge as a risk for financing of both the fiscal deficit and the current account balance, it said. The continued interplay of domestic reforms, prudent macroeconomic management and swift policy responses, backed by consistent on-ground implementation, will be key to shaping India’s economic trajectory, said the ministry.
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Global developments related to AI and “weaponisation of supply chains in general are reminders of the distance India needs to travel to achieve long-term resilience and strategic leverage”, it said. “Recent years have been a time for hunkering down and battening down the hatches. Coming years will be no exception,” it said.
Supply concentration risks
The ministry flagged the concentration risk embedded in India’s industrial metal supply chains, citing the likelihood of the recent flooding in Chile, a key copper exporter, impacting supplies of the metal critical to economic growth and the AI boom. Prices of industrial commodities, including critical minerals and rare earths, have remained elevated in July, the ministry pointed out and said that the increase in prices is a “reminder that resilience-building activities should not be merely a response to real and ongoing vulnerabilities”. “Building adequate buffers across energy and industrial metals will likely remain important to India’s industrial and macroeconomic stability going forward,” it said.
Continued progress in critical minerals, coal gasification and shipbuilding, and Skyroot Aerospace’s successful orbital launch further signal India’s progress,the ministry added.