India’s growth momentum remains intact despite the West Asia conflict and its impact on crude oil prices, with the government working on additional measures to attract foreign direct investment (FDI) while remaining confident about the strategic sale of IDBI Bank, top government sources told CNBC-TV18.Officials said strong domestic consumption continues to support economic activity and that the momentum seen in the March quarter of FY26 has carried into the current quarter. “Growth is not under stress,” sources said, adding that there is currently no requirement for additional government borrowing and no change in the fiscal deficit target of 4.3% of GDP for FY27.
FDI push, IDBI sale remains on track
The government is preparing additional steps to boost FDI inflows even as it rules out any proposal to curb capital outflows, according to the sources.Sources also said the recent removal of long-term capital gains tax for foreign portfolio investors holding bonds was aimed at facilitating India’s inclusion in the Bloomberg bond index and supporting foreign capital flows.On disinvestment, sources said the government remains confident that the strategic sale of IDBI Bank will move ahead. DIPAM and the Department of Public Enterprises have prepared a year-long pipeline and a medium-term roadmap for both disinvestment and asset monetisation, they added.”Weekly review meetings are being held” to track progress on monetisation and strategic sale plans, sources said.The government is also confident of exceeding its FY27 asset monetisation target of ₹80,000 crore.
No change in capex plansDespite rising geopolitical uncertainty, sources said there has been no change to the government’s capital expenditure plans for the current financial year.They added that no supplementary demand for additional expenditure is expected during the upcoming Monsoon Session of Parliament.According to the officials, the FY27 Budget had already factored in uncertainties linked to tariffs and the global economic environment.West Asia remains key riskWhile expressing confidence on growth, people familiar with the matter acknowledged that the biggest external challenge remains the West Asia conflict, particularly through higher crude oil and fertiliser import costs.Sources said the government has already provided ₹1.23 lakh crore of support to oil marketing companies (OMCs) to keep fuel prices stable and shield consumers from the impact of higher crude prices during the first 78 days of the conflict.They also said the Fertiliser Ministry has sought a 100% increase in subsidy allocation over the budgeted ₹1.77 lakh crore for FY27.Officials added that higher import duties have reduced demand for gold imports, while remittance flows have so far remained unaffected.A clearer picture of the economic impact of global developments and the monsoon will emerge after April-June quarter data and further assessment of El Niño conditions, the sources said.
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