RBI FSR: Global Shocks Threaten India's Economy Amid Strong Fundamentals

• RBI's Financial Stability Report (FSR) highlights external risks and global shocks as near-term challenges for the Indian economy.
• Geopolitical tensions, trade conflicts, and geoeconomic fragmentation could increase rupee volatility, weaken trade, and dampen FDI.
• Elevated global market risks, especially a US equity correction, could spill over to Indian markets, causing FPI outflows.
• Despite global headwinds, India's economy shows robust domestic activity, with Q1 and Q2 GDP growth surprising on the upside.
• RBI and multilateral agencies revised India's 2025-26 GDP growth forecast upwards, citing strong fundamentals and positive outlook.

Why It Matters: RBI FSR: India's strong economy faces near-term global shocks, requiring careful navigation.