Report: Economy will move forward on the basis of reforms and employment generation amid tariff war; Finance Ministry report

New Delhi| Despite tariff war and global uncertainties, the Indian economy will continue to grow on the back of right strategies, continuous domestic reforms, infrastructure development and employment generation. India’s long-term growth is driven by macroeconomic stability, a resilient external sector, fiscal deficit control, declining inflation, better employment prospects and higher consumption spending, the Finance Ministry said in a report released on Tuesday. The key to this stability lies with private capital formation, the March edition of the Department of Economic Affairs’ monthly economic review said. Regulatory measures can motivate the private sector to play its role.

There is a risk on economic growth
Global uncertainties are a major risk in terms of economic growth in 2025-26, the monthly economic review said. The private sector and policy makers should be conscious of this and take immediate action to stop it.

India has an opportunity to strengthen its position in global trade and manufacturing
The report said that even though the trade war that started after the imposition of retaliatory tariffs by the US and the ongoing tension between many countries are posing challenges for India, it is also important for the country to take advantage of the comparative advantage in international trade and manufacturing. There is also an opportunity to strengthen its position. India can reduce these risks with continued focus on geopolitical developments. The country can take advantage of emerging opportunities in strategic trade negotiations, domestic reforms and manufacturing investments.

Inflation: Prices will reduce due to better production of crops
The report on inflation said that uncertainties regarding Rabi crop have been removed to a great extent. In the second advance estimates, food prices are expected to soften further due to record wheat production and higher production of pulses. Apart from this, the fall in crude oil prices can also help in providing further relief on the inflation front. However, global uncertainties such as trade tensions and geopolitical risks could push prices higher as supply disrupts.

Debt reduction will help private investment
The decline in government debt as a proportion of GDP will create additional domestic resources for private investment, the ministry said. Especially, when states will also insist on reducing their debt. This will increase fiscal discipline and will also give impetus to economic growth. According to the review, healthy reservoir levels and strong crop production in the current financial year have brightened the prospects for the agriculture sector.