The Reserve Bank of India (RBI) claims that India is better positioned to act as a “connector country” that may play a significant role as an intermediate in industries including technology, digital services, and pharmaceuticals amid changes in industrial policy and global trade realignments.

According to the central bank’s “State of the Economy” report, the Indian economy is still surrounded by stability, which includes monetary, financial, and political stability; consistency and certainty in policy; a friendly business environment; and strong macroeconomic fundamentals and a transparent, rule-based, and forward-looking policy ecosystem.

IMF forecasts for April 2025 state that India will continue to be the major economy with the greatest rate of growth this year and will probably overtake Japan to take the fourth-largest spot in the world economic rankings.

Significantly lower inflation pressure is expected to maintain a long-term alignment with the objective in 2025–2026. Businesses and consumers are still optimistic and in favor of economic growth.

Furthermore, the Reserve Bank‘s actions since January 2025 have greatly reduced liquidity and soothed the financial markets. Since the end of March 2025, system liquidity has remained in excess.

It is interesting that, in March 2025, domestic institutional investors (DIIs) overtook foreign portfolio investors (FPIs) in ownership of Nifty-500 businesses, notwithstanding uncertainties surrounding global capital flows.

This represents a structural change in the Indian equities markets as retail and systematic investment plan (SIP) flows offer a stable long-term investment foundation, while DIIs, such as mutual funds and insurance corporations, progressively counteract the volatility brought on by FPIs.

According to the Reserve Bank, mood in domestic financial markets has improved as a result of a reduction in India-Pakistan tensions, an improvement in the state of international commerce, and lower domestic inflation.

The RBI claims that in this case, the recent conclusion of a free trade deal with the UK indicates that bilateral trade ties are becoming stronger.

“Going forward, notwithstanding the daunting challenges on the horizon, India stands well-positioned to navigate the ongoing global headwinds with confidence, ready to harness emerging opportunities and consolidate its role as a key driver of global growth.”