Macroeconomic fundamentals of Indian economy remain strong amid global challenges

New Delhi: Macroeconomic fundamentals of the Indian economy remain strong, supported by robust domestic demand, healthy corporate balance sheets and sustained fiscal discipline amid global challenges, Union Minister Pankaj Chaudhary told Parliament on Tuesday.

Further, according to the RBI's Financial Stability Report (June 2026), the domestic financial system remains resilient, underpinned by strong bank and non-bank balance sheets, Minister of State for Finance Pankaj Chaudhary said in a written reply in the Rajya Sabha.

"As a major player in global markets, India's economy is also linked with international trends, which impact its exchange rate movements. Since the start of the West Asia conflict, the Indian Rupee (INR) has depreciated against the US Dollar (USD) by 5.8 per cent in FY27 (from February 27 up to July 22, 2026)," he said.


Read more: No proposal for one-time waiver of loans of small, marginal farmers: MoS Finance

At present, the macroeconomic fundamentals of the Indian economy remain strong, he said, adding real GDP has consistently grown at over 7 per cent during the last three years.

Economic growth continues to be supported by robust domestic demand, healthy corporate balance sheets and prudent fiscal management, he said.

The high-frequency indicators for the first quarter of 2026-27 also point to sustained momentum in economic activity and domestic demand, indicating the continued resilience of the Indian economy, he said.

The Index of Industrial Production (IIP) recorded a growth rate of 4.9 per cent year-on-year (YoY) in April 2026 and 5.1 per cent YoY in May 2026, indicating continued investment-led industrial growth despite heightened global uncertainty, he said.

"The industries reliant on imported inputs may face cost pressures. Thus, to support stability, the Government is easing import-led inflation through duty adjustments, expanding MSME credit, ensuring affordable financing, attracting long-term FDI, promoting trade facilitation and digital platforms, and advancing free trade agreements," he said.

The value of the INR is market-determined, with no target or specific level or band, he said.

The RBI regularly monitors the foreign exchange market and intervenes in situations of excess volatility. Further, the RBI monitors key developments across the globe which may have an impact on the USD-INR exchange rate, he said.

Read more: Number of billionaires grows 4-fold in five years to 576 in AY'26: Income tax return data

In reply to another question, Chaudhary said, Regional Rural Banks (RRBs) posted the highest-ever net profit of Rs 10,177 crore in 2025-26.

"The financial health of RRBs has improved in recent years. RRBs posted the highest ever consolidated net profit of Rs 10,177 crores during 2025-26. RRBs have also shown consistent improvement in key financial parameters like Capital to Risk Weighted Asset Ratio (CRAR), deposits, advances, Non-Performing Asset (NPA), Credit-Deposit Ratio (CD ratio) etc," he said.

Government regularly reviews the progress made by RRBs in deepening financial inclusion in rural and remote areas, he said.

The targets for various financial inclusion schemes like Pradhan Mantri Jan-Dhan Yojana (PMJDY), Pradhan Mantri MUDRA Yojana (PMMY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Atal Pension Yojana (APY) are set by DFS and periodically monitored, he added.

Replying to another question, Chaudhary said the financial health of Public Sector Banks (PSBs) has shown significant improvement with healthy balance sheets, historically high profits and multi-decadal low level of gross non-performing assets (GNPAs).

Gross Non-Performing Assets (GNPA) of PSBs have come down to historic low of 1.9 per cent in 2025-26, achieve highest-ever net profit of Rs 1.98 lakh crore.

The Government has introduced Emergency Credit Line Guarantee Scheme (ECLGS 5.0) in May, 2026, to tide over any short-term liquidity mismatches faced by businesses due to West Asia Crisis.

The scheme provides guarantee coverage to Member Lending Institutions (MLIs) through National Credit Guarantee Trustee Company Limited (NCGTC) for the amount in default under the additional credit facility extended to the eligible borrowers, he said.

The scheme provides 100 per cent guarantee coverage for MSMEs and 90 per cent guarantee coverage for non-MSMEs and the scheduled passenger airline sector, up to a credit flow of Rs 2,55,000 crore, which includes Rs 5,000 crore specifically earmarked for the scheduled passenger airline sector, he said.

Under ECLGS 5.0, he said, borrowers in the airline sector are eligible for assistance of up to 100 per cent of their total peak credit outstanding (both fund-based and non-fund-based) during the fourth quarter of 2025-26, i.e., from January 1, 2026 to March 31, 2026 (both dates inclusive).

The maximum loan amount available under ECLGS 5.0 for the airline sector is Rs 1,500 crore per borrower (of this, any amount beyond Rs 1,000 crore and up to Rs 1,500 crore shall be permitted only with a proportionate equity contribution from the promoters/owners), he said.