Mumbai (Maharashtra) [India], November 17 (ANI): Amid heightened global uncertainty driven by disruptive tariff measures and escalating geopolitical tensions, the Indian economy continues to stand out for its exceptional resilience and remains firm against external headwinds.
Anuradha Thakur, Secretary of the Department of Economic Affairs in the Ministry of Finance, highlighted this resilience during the opening plenary session on “Financing Future Growth” at the CII Financing Summit 2025 held on Monday. She said India’s financial sector is positioned to act as a catalyst for the country’s next phase of economic transformation as it advances toward a high-growth trajectory.
According to a CII statement, Thakur said India’s financial sector has become sufficiently robust, innovative, and increasingly inclusive, adding that it is now ready to script a new chapter of economic transformation. She noted that the government has implemented several measures — including bank recapitalization and strengthening NPA recovery mechanisms — to position the sector as one of the most stable among emerging economies.
However, she stressed the need for continued reforms given the rapidly evolving landscape. She underscored the importance of prudent regulation, strong disclosure and governance standards, controlled liberalization, a resilient banking system, deeper financial inclusion, a calibrated approach to foreign currency exposure, world-class digital infrastructure, diversified financial systems, and strong macroeconomic management.
Thakur also highlighted three major structural shifts shaping India’s financial system: the rapid financialization of savings, with mutual fund assets under management tripling even as low-cost deposits slow; a shift away from bank-dominated credit, with banks’ share in total credit falling from 77 percent in 2011 to around 60 percent in FY22; and a sharp rise in equity market participation, reflected in a six-fold increase in IPO activity since 2013. These shifts, she said, reinforce the need for deeper market liquidity and stronger regulatory coordination to direct savings into productive investment.
She added that many global investors now view GIFT City not only as a financial hub but as a potential sandbox for broader financial-sector reforms in India. She pointed to ongoing work by IFSCA — including more facilitative fund management rules, expanded use of digital technologies, and clearer regulatory frameworks — that has positioned GIFT City to pilot innovations that could later scale across the wider financial ecosystem.
Echoing this perspective, V. Anantha Nageswaran, Chief Economic Adviser to the Government of India, observed that globalization is being reshaped by geopolitical shifts. Capital flows, historically driven by macro fundamentals and market indicators, are now increasingly influenced by political alignments and strategic considerations.
This dynamic, he said, has created a paradox: despite India being one of the fastest-growing major economies, foreign investors continue to demand a higher country risk premium from India compared to its developing peers. In an era of politically influenced global capital, Nageswaran emphasized that India must strengthen domestically driven financing, as external capital alone will be insufficient to meet the country’s development ambitions.
He also cautioned against trends visible in advanced economies — including deepening financialization, surging asset prices, and weak employment — and warned that a potential collapse of the AI-driven boom could have wider consequences than the dot-com crash of the early 2000s. Additionally, he said rapid tokenization and digital disintermediation will fundamentally reshape banking, urging financial institutions to stay aligned with the real economy and adopt long-term strategies.
Underscoring that stability, resilience, and alignment with national priorities must anchor India’s financial system, Nageswaran said domestic drivers must be strengthened across four high-priority areas: industrial upgrading toward high value-added production, harnessing the demographic dividend, moving toward near energy self-sufficiency, and expanding innovation capacity. Meeting these goals, he noted, places significant responsibility on the financial sector.
He added that innovation in financial products must accelerate, particularly in areas such as blended finance for climate goals, stronger urban infrastructure financing models, and digital-first insurance. (ANI)
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