The Indian economy continues to grow at a strong pace, supported by robust domestic demand, moderate inflation, and prudent macroeconomic policies despite global headwinds.
This was stated by the Reserve Bank of India in its latest Financial Stability Report.
The report highlighted that the domestic financial system remains resilient, backed by strong balance sheets, accommodative financial conditions, and low volatility in financial markets.
However, it cautioned that near-term risks persist due to external uncertainties, including geopolitical developments and trade-related challenges.
The report stated that the global economy has shown resilience, aided by fiscal support and strong investment in artificial intelligence.
At the same time, it warned of downside risks stemming from elevated uncertainty, rising public debt levels, and the possibility of a disorderly correction in global financial markets.
According to the RBI, the health of scheduled commercial banks remains sound, with strong capital and liquidity buffers, improved asset quality, and robust profitability. Non-banking financial companies continue to remain robust, supported by strong capital buffers, healthy earnings, and improving asset quality.
The insurance sector also remains resilient, with the consolidated solvency ratio staying above the minimum regulatory threshold.
Meanwhile, household debt rose to 41.3 per cent of Gross Domestic Product at the end of March 2025, marking a steady increase from the five-year average of 38.3 per cent. Consumption-related loans accounted for the bulk of household borrowings.
However, the RBI pointed out thatthe country’s household debt remains lower compared to most peer emerging market economies.
